Why the Dow Bounced Back 130 Points Today

After yesterday's sluggish showing in which the Dow Jones Industrial Average (DJINDICES: ^DJI  ) lost 138 points on concerns over global manufacturing and slow hiring, blue chips rebounded Thursday, nearly erasing all of Wednesday's losses. Today's surge stemmed partially from a move that many economists already expected: the European Central Bank cut the benchmark refinancing rate from 0.75% to 0.5%, attempting to encourage borrowing to stimulate growth. 

What economists didn't see coming was a sudden drop in claims for jobless benefits, which reached the lowest level in more than five years. Stocks responded by firing on all cylinders, as 90% of Dow components climbed. And none rose more rapidly than Cisco Systems (NASDAQ: CSCO  ) , which added 1.8% after a serious stumble yesterday caused by concerns over rival Arista Networks' new super-fast data switch offering. 

While technically the third largest gainer of the day, Chevron's (NYSE: CVX  ) considerable weight in the index makes the oil giant's 1.5% gains worthy of discussion. Chevron shares enjoyed a boost today after an Ontario judge blocked legal efforts by a law firm to seize some of Chevron's foreign assets -- an attempt based on an $18 billion ruling against the company in Ecuador. 

Only two Dow components ended in the red, one of which was UnitedHealth Group (NYSE: UNH  ) . Slipping 0.4%, investors in UnitedHealth are dealing with the fact that the dynamics of the health-care industry are changing as "Obamacare" measures go into effect. The financial impact on companies like UnitedHealth is by no means clear, which makes for anxious shareholders. 

Coca-Cola (NYSE: KO  ) ended as the biggest loser in the Dow Thursday, despite only slumping 0.6%. Though there wasn't one obvious catalyst causing investors to sell off today, uproar over the name of the Rio de Janeiro stadium -- where the 2016 Olympics will be held -- could be drawing unwanted press to the soda giant. The disgraced former president of FIFA, Joao Havelange, took bribes during his time in power; Rio's stadium now bears his name. Though Coke had nothing to do with Havelange's impropriety, Coke began sponsoring FIFA during Havelange's tenure.

Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!

Read/Post Comments (1) | Recommend This Article (8)

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.

Add your comment.

DocumentId: 2405019, ~/Articles/ArticleHandler.aspx, 7/28/2014 7:26:50 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...