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.
Investors have lately had to deal with something they truly hate: uncertainty. Between economic data that hasn't given them a clear picture of where the global economy is headed and policy-making decisions that could have a huge impact on investor behavior for years to come, the stock market's oscillations have reflected the unwillingness of many investors to take a stand one way or the other on its future direction. At 10:45 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI ) were down 75 points, with broader market measures showing more modest declines.
Looking at today's declining stocks, though, shows some hints about where investors' biggest fears are. Home Depot's (NYSE: HD ) decline of 1.4% seems to fly in the face of good retail-sales news earlier this week, but investors seem increasingly unsure whether the housing market's recent contribution to general economic growth can continue through rising interest rates and their impact on home buyers' ability to get mortgage financing. With Home Depot stock having gained nearly 50% in the past year, its pullback thus far has been insignificant, but if higher rates actually do result in a setback in the housing market's recovery, then the home improvement retailer could find it harder to stay on track with its impressive performance.
At the same time, company-specific concerns about execution have also weighed on some stocks. Boeing (NYSE: BA ) , which is down 1% this morning, is the prime example of this phenomenon. This morning's latest scare is the reported discovery of faulty wiring for fire extinguishers on Boeing's 787 Dreamliner aircraft. Lately, just about every glitch in the new aircraft has resulted in declines for Boeing's stock, even though the company's long-term prospects apparently remain sound as a profitable airline industry shells out for new planes. Yet Boeing still needs to prove that it can overcome its obstacles and meet delivery commitments that have proven to be challenging in the past, and if it shows signs of falling short, the stock could fall further.
Finally, Cisco Systems (NASDAQ: CSCO ) is down 1.2% in advance of its earnings release tonight. The company has done a great job of reinvigorating its business, putting part of its focus back on its core networking and communications segment while also looking for profitable ways to expand into cloud computing and mobile-device integration. Yet rivals in the industry are all taking their own specific angles toward bolstering their respective business models, and if Cisco can't continue to demonstrate its ability to fend off competitors seeking to infiltrate its core business, then substantial share-price gains over the past year could give way to further declines.
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