Why The Dow Rallied Today

In a break from tradition, global and U.S. markets enjoyed a relatively quiet day today in the absence of any major macroeconomic news.  U.S. markets bucked a trend today, rising at first, but fading slightly toward the end of the trading session.  The Dow Jones Industrial Average (INDEX: ^DJI  ) closed the day up 21.3 points, for a gain of 0.2%. This marked the first Monday that the Dow traded higher since May. The S&P 500 also rose 0.2%, and briefly flirted with the 1400 mark that the index hadn’t seen for nearly three months. The tech-oriented Nasdaq posted the strongest performance among major U.S. indexes, rallying 0.7%. The VIX (INDEX: ^VIX  ) , often referred to as the market’s "fear gauge," also increased 2.0% during the trading period. 

Around The Markets

Company-specific story lines dominated the day’s news, none more prominently than Best Buy (NYSE: BBY  ) , whose shares surged 13.3% after its former CEO, Richard Schulze, announced an unsolicited buyout offer at a sharp premium to the company’s current share price.  Considering that Schulze already  owns around 20% of the company, the strong likelihood that someone will need to take a hatchet to Best Buy’s business model, and the cushy premium with the bid, Schulze’s offer seems quite tempting.  However, the company called the bid "highly conditional." 

In other corporate news, shares of household name Tyson Foods (NYSE: TSN  ) plummeted 8.0%, as the company reduced its full-year guidance as a result of the brutal droughts affecting much of the U.S. agricultural industry. The company cited the drought as responsible for driving up feed costs. Although it gave no profit forecast, the company said that annual revenue should come in around $33 billion.  Analysts expected $34 billion.

On the upgrade/downgrade front, shares of dividend powerhouse Annaly Capital (NYSE: NLY  ) fell 2.6%, as FBR Capital downgraded the mortgage REIT to a sell. Investors have wondered lately about the safety of its prodigious payout (12.8% as of this writing), especially as interest rates can only go in one direction. Given its razor-thin current ratio of 0.1X, and the 71.1% decline in revenue that it's experienced over the last 12 months, these fears seem at least somewhat valid.

What It All Means

Although smart investors always keep a finger on the topics de jour, true success comes from looking past the everyday noise of the markets.  Looking past the day-to-day allows you to focus on what matters most -- finding stocks that can thrive over the long-term.  The Fool recently highlighted three Dow dividend dynamos that fit the bill of long-term winners.  You can get the full scoop on which stocks they are, and what makes them so great, in our new free research report by just clicking here.

Fool Andrew Tonner held no positions in any of the companies mentioned in this article at the time of publication.  You can find Andrew and all his Foolish writing on Twitter at @Andrew Tonner.

The Motley Fool owns shares of Best Buy and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Annaly Capital Management. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1974621, ~/Articles/ArticleHandler.aspx, 10/23/2014 9:59:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement