Will the Dow Finally Drop This Week?

After six straight weeks of gains for the Dow Jones Industrials (INDEX: ^DJI  ) , bargain-seeking investors are hoping for a break to let them buy in more cheaply. At least so far today, it looks like those investors may get their wish, as the Dow was down 38 points at 10:45 a.m. EDT. With earnings season having mostly ended, investors turned their attention once more to Europe, where hopes that the European Central Bank would take more dramatic action to shore up bond markets were largely thwarted today.

Among Dow stocks, losers far outnumbered gainers. American Express (NYSE: AXP  ) was the largest decliner, falling almost 1.5%. Over the weekend, The Wall Street Journal discussed the changes that AmEx and other card companies have made in helping cardholders use their rewards points more efficiently. With 80% of card purchases made using rewards cards, being smart about their use is increasingly important for AmEx and its rivals.

Cisco Systems (Nasdaq: CSCO  ) also gave up more than 1% in morning trade, falling back from its huge rally last week. In the aftermath of the company's big dividend increase, which sent shares up almost 10% last Thursday, Fool tech analyst Eric Bleeker pointed out that unless tax laws allow the company to repatriate more of its overseas earnings, Cisco will find it difficult to raise its payout any further.

Finally, McDonald's (NYSE: MCD  ) rose more than half a percent after reports said that the fast-food giant was testing a system allowing it to accept PayPal payments in France. Coming soon after Starbucks (Nasdaq: SBUX  ) announced a deal with Square to handle its credit- and debit-card transactions, the McDonald's move emphasizes just how important electronic payments are to the restaurant crowd.

Hold steady
After a bull run, it often seems like the good times will last forever. But with Europe rearing its ugly head, it looks like the Dow might well pick this week to end its winning streak.

You should prepare now for the inevitable downturn. The best way to handle reversals is to have great stocks you can trust in the long run. That's exactly what you'll find in The Motley Fool's special report on the three Dow stocks that feature growth and income. Check it out -- for free! -- today.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Cisco Systems, Starbucks, and McDonald's. Motley Fool newsletter services have recommended buying shares of Starbucks and McDonald's, as well as writing a covered strangle position on American Express and writing covered calls on Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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