These Stocks Can't Keep the Dow Jones Down

Europe is saved!

With the Dow Jones Industrial Average (INDEX: ^DJI  ) soaring 1.7% today and notching a 220-point gain (as of 2:15 p.m. EDT), that's the big news today. Europe's head honcho of central banking, Mario Draghi, says he'll buy as many government bonds as necessary in order to keep weaker EU economies' interest payments at manageable levels and reduce the risk that one or more countries will fall into default. (Here's looking at you, "PIIGS" -- Portugal, Italy, Ireland, Greece, and Spain).

Wall Street is raising a glass and toasting the news, with investors in financial stocks being particularly liberal with the economic Kool-Aid. Shares of Bank of America (NYSE: BAC  ) and JPMorgan Chase (NYSE: JPM  ) are leading today's charge higher, drunk on 4%-plus gains.

So who's left out of the party? So far, the weakest performers on the Dow are found in such conservative investments as telecom. With less than a 0.1% gain, Verizon Communications (NYSE: VZ  ) currently lags the rest of the index, scoring the smallest win of all. In second (-to-last) place is its archrival, AT&T (NYSE: T  ) .

Why such paltry gains in such an ebullient market? Blame Nokia. AT&T already offers the Finnish phone-maker's wares to its customers and is likely to sell the newest line of Lumias that Nokia unveiled yesterday, as well. Verizon, too, has confirmed that it will help Nokia give the Lumia greater exposure in the U.S. market beginning in the fourth quarter.

Both AT&T and Verizon are hoping the creation of a third smartphone "ecosystem" will bolster their ability to negotiate subsidy pricing on iPhones. But investors' lack of enthusiasm toward yesterday's Lumia launch has to be a disappointment. Unless the Lumia can win fans quickly, AT&T and Verizon may be stuck with the iPhone -- and the high cost of subsidizing it -- for many moons to come.

Don't let Europe get you down -- or up
Given their dilemma, maybe AT&T and Verizon should send thank you-notes to Mr. Draghi for helping to give their stocks any lift at all today. Long-term investors, however, should be aware that such gains are fleeting. For all the hoopla, the fact remains that all Europe is really doing is trying to fix some countries' debt problems by…issuing more debt of its own. What does this mean for investors in today's favored financial sector? Read our new premium report on Bank of America and find out.

Fool contributor Rich Smith owns shares of Nokia. Click here to see his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase and Bank of America. 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 insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (4)

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: 2008485, ~/Articles/ArticleHandler.aspx, 11/25/2014 5:18:57 PM

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