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.
An 11-point gain Thursday for the Dow Jones Industrials (DJINDICES:^DJI) might not sound all that impressive. But when you consider that the average gained almost 300 points yesterday, simply managing to hold onto all those gains is a feat in itself. With Fed policy established for the foreseeable future, end-of-year cross-currents and company-specific news are likely to be the biggest movers for stocks. Still, the plunge in the gold market could have a big impact on Caterpillar (NYSE:CAT) and General Electric (NYSE:GE), while Nike's (NYSE:NKE) earnings report should get attention in tomorrow's trading.
Nike dropped 0.4% during today's regular market session and moved in both directions in after-hours trading following its quarterly report after the bell. Nike reported better-than-expected earnings for its November quarter, with an 8% jump in sales producing earnings per share that were a penny better than investors had projected. Substantial sales declines in Japan and Nike's emerging-market division offset strong gains in Europe and reasonable performance in North America and China, although the 9% rise in North American revenue was below the 10% level that investors had hoped to see. With solid results, Nike appears poised to stay on its growth trajectory.
Unfortunately, today's big drop in gold prices doesn't tell the same story for Caterpillar and, to a lesser extent, General Electric. Gold fell below the $1,200 per ounce mark on Thursday to its lowest level in three years, putting mining companies at further risk of not being able to operate profitably if the bearish trend continues. That's a major problem for Caterpillar, which made a big move into mining equipment production with its purchase of Bucyrus in 2011. With miners scrambling to cut costs, major capital expenditures aren't likely to come any sooner than absolutely necessary, and that will weigh on Caterpillar's results.
Meanwhile, for General Electric, drops of 2% to 3% in gold and silver prices won't have quite the same impact, as GE has only recently gotten more involved in the mining-equipment industry. Nevertheless, with the company looking to boost its manufacturing and industrial businesses, General Electric would have preferred to see favorable conditions in the mining industry. That's looking increasingly unlikely as the bottom continues to fall out of the precious-metals market.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends and owns shares of Nike. It also owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.