Dow Takes a Step Back With the Fed Back in the Spotlight

With financial eyes once again on the Federal Reserve, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed down modestly today, falling 37 points, or 0.2%. The Fed's Open Market Committee is meeting today and tomorrow and will report the results of its eight-times-a-year meeting on Wednesday, giving investors the latest insights as to when the central bank may begin tapering its $85 billion monthly stimulus program.

Today, only one economic report was released -- June pending home sales, which showed a decrease of 0.4% from May, but that number was better than economists' projection of a 1.7% drop. Increasing mortgage rates, which have gone up as the Fed threatens to cut its Treasury bond purchases, are putting pressure on the housing recovery. Still, sales are just a hair off the six-year high it hit in May.

On the Dow today, Caterpillar (NYSE: CAT  ) led all comers, finishing up 1.2% after announcing it will buy back $1 billion of its shares from French bank Societe Generale, most of which it will purchase immediately. With the global mining industry in a down cycle, Caterpillar has struggled this year, falling last week after a forgettable earnings report that included a guidance cut. The share repurchase announcement would seem to indicate that management sees the stock as undervalued.

Some minimum-wage workers at McDonald's (NYSE: MCD  ) joined with fellow fast-food employees and walked off the job today, demanding a $15-an-hour wage in a weeklong protest. The minimum-wage issue appears to be gaining traction after the D.C. Council recently passed a law designed to make Wal-Mart pay its future workers there a minimum of $12.50 an hour, and President Obama's recent statement that the widening income gap was damaging the country. McDonald's has also been the target of much derision and mockery since a sample budget for employees, which among other things implies that a worker needs two jobs, found its way to the media. Shares of Mickey D's were unaffected by the strike, falling 0.2%, but the issue will continue to circulate and could become a greater concern.

Finally, Bank of America (NYSE: BAC  ) was the Dow's biggest loser today, falling 1.4%. The motivation for the volatile too-big-to-fail bank's drop seemed to be little more than the decline in home sales, as it is heavily dependent on selling mortgages. Nervousness about the upcoming Fed report may have also contributed to B of A's fall.

Wall Street has been getting rich on trading floor tips for decades -- and for decades, those tips have been "for industry insiders only." But not anymore. Our top technology analyst recently infiltrated one of the finance world's most exclusive gatherings and left with three incredible investment opportunities, straight from the CEOs. These are profit-building strategies Main Street isn't meant to hear about -- so act now before someone shuts us up. Click if you want "industry insider" earnings -- now!


Read/Post Comments (0) | Recommend This Article (3)

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.

DocumentId: 2565837, ~/Articles/ArticleHandler.aspx, 7/26/2014 7:46:39 AM

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...


Advertisement