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.
For suffering investors, today brought at least a brief respite from the worst of the month of October so far. Even as the government shutdown continued and the nation kept hurdling toward a potential default, investors apparently cheered the nomination of Janet Yellen to replace Ben Bernanke as Fed chair next year. The Dow Jones Industrials (DJINDICES: ^DJI ) finished up 26 points, even though the S&P 500 rose less than a point and the Nasdaq actually dropped on the day.
Four of the Dow's components were especially noteworthy in the average's rise today. AT&T (NYSE: T ) climbed nearly 2% as the telecom giant could sell its wireless-tower assets to Crown Castle International in a deal that could reap an estimated $5 billion. Given the competitive demands on AT&T's balance sheet, including planned share repurchases, ongoing dividends, and investment to upgrade its wireless network, the cash could help AT&T move forward without incurring as much debt as it would otherwise need. The move would also free up AT&T to pursue potential acquisitions as it looks for avenues for further growth.
IBM (NYSE: IBM ) also perked up, rising 1.5%. Despite yesterday's losses after losing a key government contract to Amazon's cloud-services division, IBM is still working to bolster its cloud presence. Today, it showed new products and services designed to help customers better use private and hybrid public-private clouds. IBM has a lot invested in its Big Data initiatives, and helping potential customers set up the infrastructure they need to gather data for analysis is a key component of IBM's growth plans.
Goldman Sachs (NYSE: GS ) climbed 0.9% despite a Wall Street Journal report connecting an investment the U.S. bank made in the Chinese educational industry to bribery charges concerning a company in which Goldman invested. The episode is noteworthy not for any potential impact on Goldman, which is unlikely to be significant, but rather for the fact that investors who might have sent the stock stumbling on similarly minor news several years ago have gotten inured to potential bad publicity.
Finally, Caterpillar (NYSE: CAT ) gained 0.8%. The construction giant kept its dividend steady in an unsurprising announcement today, but perhaps more important is the fact that the global economy shows ongoing signs of improvement despite the U.S. government shutdown. For companies like Caterpillar with substantial exposure to international economic conditions, that's a strong reminder of why having multinational businesses among your holdings can diversify your portfolio.
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Report this Comment On October 09, 2013, at 9:53 PM, energeticfool2 wrote:
In my own evaluation of CAT using the Fair Value with Market Impact app for my iPhone, I find that the forward 5 year annual growth rate would have to be about 12% to allow a fair value of $83.5 (which is current stock price). Based on that, if the Washington "show" ends up with a decent ending, then I think the current valuation is low since I bet growth could be higher than that with China then having improved growth that will help drive CAT.
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