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.
What a week it was on Wall Street and for the U.S. economy. On Monday, investors seemed nervous about what the Federal Reserve may say or do at its last Federal Open Market Committee meeting of 2013 and Ben Bernanke's last one as chairman. By Tuesday, investors seemed to think the Fed wouldn't begin tapering its bond-buying program. However, the Fed did just that on Wednesday afternoon, saying it will reduce its asset purchases from $85 billion a month to $75 billion starting in January.
But the market didn't plummet on the news, as had been widely feared. The Dow Jones Industrial Average (^DJI -0.65%) instead rose 292 points on Wednesday, after the news broke. Thursday was a quiet day, but Friday brought news that third-quarter GDP was 4.1%, beating the 3.6% economists had predicted. That helped push the Dow to new all-time intraday highs.
For the week, the blue-chip index increased a total of 465 points, or 2.95%, and now sits at 16,221. The other indexes rose, too: The S&P 500 inched higher by 43 points, or 2.42%, while the Nasdaq jumped 103 points, or 2.59%.
Before we get to the Dow's losers of the week, let's look at its top performer, 3M (MMM -0.01%). The maker of Post-it Notes rose 8.13% this past week, after the board of directors approved a 35% increase to the quarterly dividend, increased its buyback plan to $22 billion through 2017, and affirmed its long-term growth prospects. Management believes that it can produce earnings per share for fiscal 2014 within a range of $7.30 to $7.55 per share, versus analysts' EPS consensus of $7.41. The company also sees a revenue increase of 4%-6% by 2017, with EPS growing by 9%-11%. Great news all around for 3M shareholders, especially those who plan to hold the stock for a long time.
Last week's big losers
In this column, I usually review the Dow's three worst performing stocks of the week. But only two of the index's 30 stocks finished in the red: Wal-Mart (WMT -0.35%), down 0.83%, and Procter & Gamble (PG 0.08%), down 0.64%. Both companies had a rough start to the week and never really recovered.
For Wal-Mart, the drop came after a federal judge in New York approved a $6 billion settlement between Visa and MasterCard and thousands of retailers, including Wal-Mart. The credit card companies will pay the retailers for overcharging transaction fees. That may sound like a win for Wal-Mart, but the company, along with the National Retail Federation, wanted the laws pertaining to these transaction fees changed, and that didn't happen. In the past we've seen the government limit the fees charged with debit cards, and the retailers want a similar law passed that would limit the fee credit card companies can charge the retailers. So some observers think this ruling really didn't change anything, and thus the battle will have to be fought again down the road.
As for Procter & Gamble, on Monday the FDA released a proposal that would require companies manufacturing antibacterial hand soaps to prove that their products are more effective in preventing infection and spreading bacteria than just plain old soap and water. The FDA warns that there's no evidence they are. If P&G can't prove these items are safer, the company will have to stop manufacturing them, and that may hurt the company's brand, especially if a competitor can prove that its similar products do work.
