This week, the big concern on the markets was dysfunction in Washington, D.C. The dysfunction itself isn't a surprise, but the low level of progress ahead of Tuesday's potential shutdown and a potential default on Oct. 17 was. Stocks have risen all year as the economy has grown, employment has improved, and earnings have risen, so there's little default risk priced into the market.
This week's modest 1.25% pullback on the Dow Jones Industrial Average (DJINDICES: ^DJI ) and 1.06% on the S&P 500 (SNPINDEX: ^GSPC ) is a small preview of what could happen if a worst-case scenario plays out in Washington DC. The good news is that there were a few bright spots on the market this week.
Nike (NYSE: NKE ) made its entrance to the Dow this week and did so with a bang, rising 6.2%. The big driver was its fiscal third-quarter earnings report, released on Thursday. The company saw an 8% jump in revenue and a 54% increase in earnings to $0.86 per share. That was a dime above Wall Street's estimates, a solid showing for the sporting-goods giant. The big surprise was the strength shown in developed markets and weakness in emerging markets. North America and Western Europe grew 9% and 8%, respectively, while Greater China saw revenue fall 3% in the quarter. Maybe, just maybe, this is a strong sign that U.S. consumers are getting healthy again.
UnitedHealth Group (NYSE: UNH ) was up 2% this week, just days ahead of the launch of Obamacare's 2014 health insurance plans. We've gotten a lot of answers about plan costs over the past month or two, and depending on who you are, they can be good or bad. For insurers, Obamacare should bring more people onto their insurance plans and boost profits long-term. At the very least, there's a huge opportunity for insurers, and investors are becoming more comfortable with how Obamacare will help and hurt them long-term.
Boeing (NYSE: BA ) rounded out the top three, gaining 1.8% this week. Just in the past two days, Boeing has received orders for 65 737 MAX airplanes from WestJet and 19 787 Dreamliners from Vietnam Air. Those are massive wins for the company, but keep an eye on a development that happened just this morning. Reuters is reporting that Norwegian Air Shuttle has taken a brand-new 787 Dreamliner out of service and is demanding repairs after repeated breakdowns. This follows battery issues earlier this year that grounded the aircraft and is another bump on the road to smooth operations for Boeing. This doesn't appear to be a deal=breaker for investors, but it's the first sign that airliners are fighting back against a troubled aircraft.
The global economy has buying opportunities
With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral or even heading backward, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!