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.
It was a rather terrible day on Wall Street as the major indexes all moved lower by more than 1%. The Dow Jones Industrial Average (^DJI 0.85%) lost 1.07%, or 159 points, and has now fallen to 14,776 after hitting a new all-time high of 15,676 back on September 18. The S&P 500 shed 1.23% today and is now trading at 1,655 after also hitting a fresh all-time high that day at 1,725. But the worst index of the day was the Nasdaq, which lost 2%, or 75 points.
Within the Dow, 27 of the 30 blue-chip stocks that make up the index fell into the red this afternoon. While some of the declines were the result of the general negative sentiment swarming throughout the markets, a few of the losers fell due to company-specific reasons. The three winners of the day -- Coca-Cola (KO 0.05%), Procter & Gamble (PG 0.59%), and Wal-Mart (WMT 0.58%) -- also moved slightly higher for company-specific news and slightly higher because of another mysterious force. So let's take a look at what those reasons were.
Procter & Gamble rose 0.9% after an analyst at Wells Fargo increased the stock's rating from market perform to outperform. The change was the result of what the analyst sees as positive cost-cutting measures being taken by management. This is a sign that Wall Street believes that what A.G. Lafley is doing with the company is a good thing and will help, not hurt, the long-term prospects of the consumer goods giant.
As for Wal-Mart, share value increased by 1.43%, making the king of retail the best Dow component of the day. The move came after it announced that it would offer the new iPhone for just $45, which is much lower than even the $99 Apple (AAPL 1.00%) itself is charging for the device. Wal-Mart will subsidize $55 per phone sold, while the wireless service provider will cover the remainder. The move is an attempt by Wal-Mart to increase store traffic and get customers talking about the retailer as the holiday shopping season heats up. It is unlikely this move will end up costing the company with the extra traffic this offer could drive to stores.
And finally, shares of Coke rose 0.62% on very little news pertaining directly to the company. But what likely caused it (the mysterious force I referred to earlier) and helped Procter & Gamble and Wal-Mart today was the idea that these three companies are safety stocks for many investors.
When we consider the fact that the Dow itself is composed of blue-chip stocks, it may be difficult to imagine that even within that special group there is an even more selective one that is considered by some investors to be to safety outlets during times when the market is falling. But that is exactly what all three of today's Dow winners are considered. They all pay healthy, reliable dividends yielding 3%, 3.2%, and 2.6%, respectively. Although none of them has shown massive revenue growth over the past year, they all have strong balance sheets, have proven themselves to be dependable winners that can weather tough economic times, and are all consumer-facing stocks, which are some of the best companies to own regardless of whether the economy is rocking it or struggling.
