The markets are flat this morning, with the Dow Jones Industrial Average (INDEX: ^DJI ) hovering at breakeven and the S&P 500 (INDEX: ^GSPC ) down a mere two points as of 10:15 a.m. EDT. With regard to the blue-chip Dow index, you can't blame either of the two stocks that reported third-quarter earnings this morning for its so-far lackluster performance.
Property and casualty insurer and Travelers (NYSE: TRV ) hit it out of the park last quarter, posting record operating profits on pricing increases across all business lines. Travelers earned $2.22 per share, well-ahead of analysts' expectations of $1.61. Note that the company does not provide guidance -- an excellent decision, in my opinion -- which increases the odds of earnings surprises. But it's no surprise shares are up 4% as of 10:15 a.m. EDT.
Meanwhile, fellow Dow component Verizon (NYSE: VZ ) missed its estimate, earning $0.56 per share versus an expected $0.64 despite achieving record profitability in its wireless division. Verizon reaffirmed its full-year financial goals. The miss doesn't seem to perturb investors: Shares are up 1.3% as of 10:15 a.m. EDT.
Regular readers of this column will know that I think investors ought to be rather cautious in the current environment. And I'm not the only one, apparently. On Tuesday, Goldman Sachs (NYSE: GS ) CFO David Viniar told analysts and investors on the the bank's earnings conference call: "There is still so much political uncertainty out there that is driving markets, both for our clients and for us. And in that environment, it is very hard to have conviction and very hard to take risk, both for our clients and for us."
The numbers reflect that cautious stance: Goldman's average daily value-at-risk -- a measure of the amount of risk the firm has -- fell to $81 million, the lowest level in six years. The folks at Goldman doesn't always get it right, but they have some savvy risk-managers, and I think it's worth keeping Viniar's comment in mind. Similarly, it's worth tracking where the smart money is finding opportunity. These are "The Stocks Only the Smartest Investors Are Buying," so click here to read up on them in our special free report now.