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.
After yesterday's huge rally in the Dow Jones Industrials (DJINDICES: ^DJI ) , you'd think investors might at least wait for an actual deal to get done before bidding stocks higher. Yet market participants didn't let their impatience get the better of them, instead focusing on the longer-term benefits that could result from more extensive negotiations over the federal budget. The Dow was unchanged as of 10:50 a.m. EDT, refusing to give up any of its 2% gain from yesterday's session. The majority of Dow stocks rose in early trading, and broader market measures were also roughly flat after big gains on Thursday.
But looking at the weaker performers in the Dow, many share one key trait: They're all directly exposed to the state of the American consumer. Wal-Mart (NYSE: WMT ) has fallen 1% as traders pointed to the retailer's decision to end its joint-venture relationship in India with a local conglomerate as a sign of the difficulties Wal-Mart could face in its global growth plans. But Wal-Mart's U.S. growth has slowed substantially, posing a potentially larger threat to the retail giant's future prospects. As online retail gains more traction, the possibility of fighting over a smaller pie if consumer spending pulls back as a result of the government shutdown is worrisome for Wal-Mart shareholders.
Coca-Cola (NYSE: KO ) has also lost ground this morning, falling 0.5%. Next week Coke will release its third-quarter earnings report, giving investors a glimpse at whether the beverage giant has managed to overcome its past sluggishness. Expectations remain low for the core North American market, where Coke faces concerns about the health effects of its namesake carbonated beverages. If other nations take action to limit soda consumption as well, though, it could create a big roadblock in Coke's plans to stoke long-term growth.
Finally, telecom giant AT&T (NYSE: T ) has lost a quarter-percent as investors become increasingly nervous about how the company will pursue growth following the monster Verizon deal to take full control of the cash-cow Verizon Wireless unit. Rival T-Mobile came out with a plan earlier this week with unlimited international data for no additional cost, providing yet another example of how competition could eventually threaten the premium prices that AT&T has been able to charge for smartphone data service. Until AT&T figures out how to get exposure to markets beyond the U.S., its best value for investors will be as a dividend giant, rather than a potential growth engine.
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