Sequester Deadline Makes Markets Go Wild

As the $85 billion cut in government spending is set to take effect today, investors can't decide whether to buy or sell stocks this afternoon.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has already swung from a 117-point loss to a gain of 43 points, or 0.3%, as of 12:50 p.m. EST. Meanwhile the S&P 500 is up 0.3% following a sharp drop at the open, while the NASDAQ has risen by 0.23%.

Today's Dow downers
Over the past three months, shares of Hewlett-Packard (NYSE: HPQ  ) are up about 80%, and they've risen more than 40% year to date. HP's stock price has been quite volatile over that time frame as investors pour into the stock on a near-daily basis. Today the stock is going nowhere, which is to be expected given HP's recent performance and the manner in which the market is acting. Investors are likely just taking money off the table and banking some nice profits, knowing that Hewlett-Packard still has a long way to go until its attempted turnaround is truly successful.

Shares of Merck (NYSE: MRK  ) are down 0.6% so far today. The company took a hit earlier this week after a study by JAMA Internal Medicine released information which showed a relationship between Merck's diabetes drug Januvia and increased chances that patients will develop pancreatitis. This news comes at a time when many believe the days of the blockbuster drugs are over as major drug-manufacturers deal with patent expirations.

Caterpillar (NYSE: CAT  ) is also trading lower by 0.6% today. Yesterday, the company's Belgian subsidiary announced that it plans to cut 1,400 jobs permanently because of limited growth prospects and what the company is calling a "multi-year, economic downturn" in the European market. When Caterpillar recently released sales figures for its four major markets, its combined sales for Europe, Africa, and the Middle East grew only 1%. While we don't know precisely how much of that growth came from Europe, we do know the continent is an important market. With Caterpillar's future prospects in Europe looking dim, investors seem to be getting nervous.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand-new report. Just click here to access it now.


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