Making Heads or Tails of the Dow's Moves Today

It's a tough day for the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . Though the index hasn't fallen sharply, down 74 points with only four component stocks in the green as of 11:45 a.m. EDT, there's little momentum building to help it get back to breakeven. Given some mixed economic news and conflicting reactions to earnings reports, investors may be at a loss with what to make of today.

It's not all bad
The latest jobless-claims report came out this morning, showing a small increase in the number of new claims filed for unemployment benefits to a seasonally adjusted 343,000. Though that was more than economists had expected, seasonal shutdowns at manufacturing plants and school summer vacations make the month of July difficult to estimate.

Despite the 7,000-claim increase last week, investors shouldn't be concerned that the gains in the labor market are slipping away. With the closures mentioned above, the week-to-week variations typically seen during the summer don't signal a return to higher rates of job cuts. Though it is slow to gain traction, the labor market is continuing to improve, and it may see more hiring later in the year once the impact of governmental spending cuts has passed its peak.

Durability
Despite the news this morning that orders for durable-goods increased 4.2% in June, Caterpillar (NYSE: CAT  ) is down 2% following a truly disappointing earnings report. The company has seen continued declines in revenue compared to the prior year, so a new trend of higher demand for durable goods should have been a sign to investors that Caterpillar could see some new buyer activity here in the States. But low commodities prices and signals from China hinting at slowed manufacturing aren't helping the company gain confidence in the market.

Home sweet home
This week has been heavy with new housing data, and though the week started off with some mixed information, signs point to continued gains in the housing market. But you wouldn't really know that looking at some of the housing-centric stocks. Within the Dow, the Home Depot (NYSE: HD  ) is down 2.3% so far today, perhaps hit by the decrease in existing-home sales reported on Monday. However, investors should recognize that the company is involved in the housing market beyond just renovations. As homebuilders and other contractors gear up for new construction, Home Depot will be alongside to help supply the materials.

Speaking of homebuilders, PulteGroup (NYSE: PHM  ) and rival D.R. Horton (NYSE: DHI  ) aren't getting any love this morning either, down about 9% and 7%, respectively. Though the sale of new homes in June rose more than 8% from May, signaling a huge jump in buyer demand, the inventory of new homes is nearly half of what economists would view as a good balance between supply and demand. Though the recent data indicates demand for new homes, the two companies are seeing red this morning due to quarterly results. Pulte missed earnings expectations and reported a 12% drop in new booked homes for the second quarter. Horton, on the other hand, reported better-than-expected earnings after it sold homes at higher prices -- but that failed to impress investors.

Lesson of the day
Conflicting data and reactions can make the market difficult to navigate on a day like today. But for long-term investors, focusing on core business opportunities and longevity can help clear up some of the fog. Keep your investing objective in mind and look for news that will truly effect your investments, rather than trying to take it all in.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.


Read/Post Comments (0) | Recommend This Article (1)

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: 2558431, ~/Articles/ArticleHandler.aspx, 12/18/2014 2:35:39 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...

Today's Market

updated Moments ago Sponsored by:
DOW 17,652.72 295.85 1.70%
S&P 500 2,044.89 32.00 1.59%
NASD 4,731.27 86.96 1.87%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/18/2014 2:20 PM
^DJI $17651.09 Up +294.22 +1.70%
DOW JONES INDUSTRI… CAPS Rating: No stars
CAT $91.19 Up +1.44 +1.60%
Caterpillar, Inc. CAPS Rating: ****
DHI $24.39 Up +0.20 +0.83%
D.R. Horton, Inc. CAPS Rating: ***
HD $99.93 Up +0.99 +1.00%
Home Depot CAPS Rating: ****
PHM $20.84 Up +0.37 +1.81%
PulteGroup, Inc. CAPS Rating: ***

Advertisement