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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Slowly but surely, stocks pushed higher this week. Fear that the U.S. would use military force in Syria has eased somewhat, and economic data was reasonably good, as retail sales and new unemployment claims both improved. By the end of the week the Dow Jones Industrial Average (DJINDICES: ^DJI ) was up 3.04%, and the S&P 500 (SNPINDEX: ^GSPC ) has risen 1.98%.
Disney (NYSE: DIS ) led the Dow with an incredible 8.6% bounce this week. CFO Jay Rasulo said the company will buy back between $6 billion and $8 billion in stock in the next fiscal year after completing a capital spending cycle over the past few years. Disney should start seeing the fruits its Lucasfilm and Marvel acquisitions, as well as its massive investments in theme parks. Disney has positioned itself well to capitalize on its media properties, and as a leader in streaming content, it should find the sky is the limit for its stock.
Microsoft (NASDAQ: MSFT ) gained back some of what it lost last week, climbing 6%. There wasn't a lot of news out about the company this week, and the stock really just gained back what it lost after announcing the Nokia acquisition. Before getting worked up about single moves, it's important to take a step back and look at what Microsoft is doing strategically with the Nokia acquisition and new products such as the Xbox One. Microsoft is trying to create a platform from which it can sell software, music, movies, and other content across a full line of products. It already dominates computers and has a large footprint in gaming consoles, so it's filling in the gap with mobile devices. It's yet to be seen whether the strategy will work, but there's at least some thought behind the madness going on at Microsoft.
Rounding out the top three is United Technologies (NYSE: UTX ) , which rose 5% this week. Within the Dow, this is really the best way to play military spending, and after rising 3.1% last week, the stock bounced again. Pratt & Whitney and UTC Aerospace Systems would both benefit financially from strikes on Syria or an expanded assault, and with military spending down, there some optimism that the conflict will help push spending higher. With strikes looking less likely now than a couple of weeks ago, I wouldn't be surprised to see United Technologies give back some of this momentum if a negotiated resolution comes to pass.