Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Losing ground for the fourth time in five days after reaching record highs last week, the Dow Jones Industrial Average (DJINDICES: ^DJI ) headed into the weekend on a sour note. Friday's 72-point decline steepened the index's weekly losses, with the Dow off more than 230 points in five days. Although 230 points sounds like a heavy sell-off, it's only a 1.5% haircut, and the reason behind the move was almost entirely speculative. Wall Street is spooked by the U.S. economy's slow, but steady, progress, fearing the Fed will wind down easy-money policies soon. Despite a dearth of bad news, the Dow dropped 0.5%, ending at 15,425 Friday.
Alcoa (NYSE: AA ) was far and away the best performer today, surging 3.9%. Though earlier this week the U.S. reported a narrower trade deficit, Alcoa's two-day surge has more to do with China's economy. Yesterday, China reported higher-than-expected imports and exports, suggesting more prosperous times in the world's second-biggest economy. Friday brought more good news from the East for the aluminum giant: Chinese industrial production climbed nearly 10% in July from last year, kick-starting the basic materials sector, which was the only sector ending in the green today.
Caterpillar (NYSE: CAT ) , also riding the coattails of China's factory data, tacked on 0.7%. The industrial machinery behemoth has severely lagged the Dow this year, as a decelerating Chinese economy, and wavering commodities prices, combined to send shares more than 5% lower. The numbers from China in the last two days are encouraging, but it's a little early to call the numbers indicative of a "trend." A few more months of sustained growth should give Caterpillar investors more confidence that a definitive upswing is in the works.
Telecom giant AT&T (NYSE: T ) slipped 1.4% Friday, as Wall Street was unimpressed with the progress one of its less-intimidating competitors made in the second quarter. T-Mobile, the fourth-largest U.S. telecom, reported nearly 700,000 net phone-subscriber additions last quarter, after losing about 200,000 subscribers in the first quarter, and more than 550,000 just a year ago. The sudden turnaround caught AT&T investors off-guard, and for good reason. If the ubiquitous AT&T network isn't able to woo subscribers away from smaller players like T-Mobile, the company may have to re-evaluate its marketing strategy, or increase incentives for new customers.
Lastly, Walt Disney (NYSE: DIS ) ended as the Dow's worst performer Friday, falling 1.6%, as the stock lost ground for a third-straight day in what looks like a lingering post-earnings hangover. Disney underwhelmed in the most recent quarter, in large part due to the poor showing of The Lone Ranger, starring Johnny Depp. On top of that disappointment, the House of Mouse won't be giving hopeful Skywalker fans any glimpse into the next Star Wars film, set for a 2015 release, at this weekend's biannual D23 Expo.
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