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.
Stock-market investors had hoped that once the Federal Reserve made its future intentions clearer, greater certainty would produce further gains. Yet ever since last week's Fed decision, investors have seemed more uncertain than ever about what's next for the markets and the overall economy. This morning, the Chicago Fed said its national activity index turned positive in July, pointing to further gains in economic growth. Yet various regional Fed presidents are raising concerns about the continued pace of the economic recovery and the need for future accommodation in monetary policy, suggesting a weaker economy and contradicting more hawkish comments late last week. As a result, investors are choosing to back away from the market's recent gains this morning, and as of 10:50 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI ) are down 46 points.
Many eyes turned to the new additions to the Dow, which took effect as of Friday's close. All three new companies have declined, but Goldman Sachs is the worst performer of the three, falling 2.9% on a particularly bad day for financial stocks. Banking rival Citigroup (NYSE: C ) could reportedly see a huge drop in revenue from trading activities, with the potential to cut earnings by double-digit percentages in the just-ending quarter. Both Goldman and Dow peer JPMorgan Chase have sizable trading operations of their own, and unless Citi's weakness is specifically due to missteps it made with particular investments, an industrywide slowdown could hit Goldman and JPMorgan as well.
But not all of the Dow's stocks are losing ground; General Electric (NYSE: GE ) has climbed 1%. The company announced a major victory in winning a $2.7 billion order from Algeria's national gas and electric provider, with GE supplying gas turbines and related technology for nine power plants in the North African nation. The deal shows the potential for growth in emerging markets throughout the world and supports GE's decision to focus on energy as a key part of its post-crisis transformation.
Finally, outside the Dow, Groupon (NASDAQ: GRPN ) has dropped almost 6% after the discount-coupon giant got bad news on the legal front late Friday. The company had sought to have a lawsuit dismissed concerning alleged improper financial disclosures it made prior to its IPO. But a Chicago federal-court judge chose not to dismiss the claims, raising continuing concerns among investors about the potential for damages. As Groupon tries to turn itself around, the last thing it needs is the distraction of a class-action suit against it.
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