Today's Best and Worst DJIA Stocks

Following a mixed pair of economic reports, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 0.49% to 15,300 points as of 1:25 p.m. EDT. The S&P 500 (SNPINDEX: ^GSPC  ) is up 0.72% to 1,652.

Here are today's U.S. economic reports:





NFIB small-business optimism index




Job openings


3.8 million

3.8 million

The key report here is the National Federation of Independent Business' small-business optimism index, which fell by 0.9 points to 93.5. Chief economist Bill Dunkelberg wrote a downbeat note, saying: "After two months of incremental but solid gains, the Index gave up in June. This appears par for the course, given that there is no reason for small employers to be more optimistic and lots of things to worry about." However, it was not all bad news for the economy. The data showed that while business optimism dropped, a larger net percentage of businesses expect to increase employment going forward -- a positive sign for the employment situation in the U.S., where unemployment still sits at 7.6%.

Source: NFIB.

Small businesses have been hit hard since the downturn, with far less access to capital than large businesses as banks tighten lending standards. Small businesses are also far more challenged than large ones when it comes to complying with the ever-increasing number of government regulations. For the time being, small-business optimism is likely to stay depressed as conditions for small business remain tough.

Source: NFIB.

IBM (NYSE: IBM  ) is today's worst Dow stock, down 2%, single-handedly holding the Dow back. I've written before why I'm not a fan of how the Dow is structured. Due to the simplistic nature of the DJIA, its weightings are based solely on stock prices, and IBM is the largest component of the DJIA, making up nearly 10% of the index -- this, despite the fact that IBM is by no means the largest company in the index at just half the size of ExxonMobil.

IBM is down today after a Goldman Sachs analyst downgraded the stock from "buy" to "neutral" and lowered its price target from $220 to $200. The analyst wrote, "We believe IBM's long-term secular prospects remain sound, but the company appears to be going through a challenging period that may limit operational earnings upside and produce more quarterly volatility than investors have been accustomed to." While at first this may appear to be an analyst focusing too much on the short term, he also lowered his earnings expectations for the company for the next three years. At 13 times earnings, IBM could be a sound long-term buy if you can handle the volatility in earnings. Fool analyst Andrew Tonner took a look at IBM last month, and you can hear his take on whether IBM is a buy here.

Today's Dow leader is Caterpillar (NYSE: CAT  ) , up 3% on no real news. Caterpillar is on the five most shorted stocks on the Dow with 3% of its shares outstanding sold short. As the mining industry around the world starts to be challenged by falling commodity prices, Caterpillar's business will not be as robust going forward. It's this worry that Caterpillar will get hurt by the boom-bust cycle of commodities that has investors pricing the shares at just 11 times earnings. That said, some investors still think Caterpillar is worth buying. Fool contributor Daniel Ferry recently laid out three reasons to buy Caterpillar.

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DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

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Related Tickers

9/27/2016 4:45 PM
^DJI $18228.30 Up +133.47 +0.74%
^GSPC $2159.93 Up +13.83 +0.64%
S&P 500 INDEX CAPS Rating: No stars
CAT $82.88 Up +0.51 +0.62%
Caterpillar CAPS Rating: ***
IBM $156.77 Up +2.79 +1.81%
IBM CAPS Rating: ****