Dow Tumbles, Airline Stocks Descend on Iraq Unrest

Walt Disney stock falls; United Continental and Delta Air Lines finish as two of the worst in the stock market today

Jun 12, 2014 at 6:36PM

The Dow Jones Industrial Average (DJINDICES:^DJI) logged a second-straight day of triple-digit losses on Thursday, as Sunni forces in Iraq threaten to take over the country from the Shiite government. The U.S. hates to see the Iraqi security forces it helped to train fall so easily and, at a press conference today, U.S. President Barack Obama said his administration would not rule out the option of using airstrikes to repel Sunni militant fighters. With oil skyrocketing on the unrest in the Middle East, the Dow shed 109 points, or 0.7%, to end at 16,734.

Walt Disney (NYSE:DIS) fell 1.8% today, nearly finishing as the blue chip index's worst performer. According to a Reuters report earlier this afternoon, Harrison Ford injured himself while filming on the set of Disney's Star Wars: Episode VII, set for a holiday 2015 release. The actor's ankle injury doesn't sound serious, but it must have investors wondering how well the elderly trio -- of Ford, Mark Hamill, and Carrie Fisher from the original Star Wars films -- can channel "The Force" to avoid mishaps like this going forward. An optimist might point out that Jedi Master Yoda was able to remain nimble for centuries on end.


Source: Delta Air Lines

Unlike "The Force" in Star Wars, oil is not a legendary source of mysterious energy, able to be harnessed only by those who choose to study, practice, and master it. Burn oil, and machines come to life; it's that simple. Airlines like United Continental (NYSE:UAL) and Delta Air Lines (NYSE:DAL) burn oil to make airplane fleets come to life. Then they fill their planes to the brim with people, who pay for the machine to take them somewhere else. Sound familiar? Simply put, this is why United Continental, Delta Air Lines, and other air carriers hate it when oil prices shoot up, as they did today.

United Continental lost 5.9%, and Delta Air Lines stumbled 5.4% in trade on Thursday, as the price of crude oil shot up 2.4%, to $106.86 a barrel. Perceived or actual disruptions in the oil supply caused by geopolitical shifts in the Middle East are not unusual, but if the effects are long lasting, the airline industry will either suffer from crimped margins, or pass on the higher costs to you, their beloved customer. While extremely sensitive to energy prices, most airlines hedge their exposure to price fluctuations with bullish futures contracts, so that when their costs go up, they also make some money through their hedge.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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