Chevron, Home Depot Jump Despite a Sluggish Dow

Medtronic makes huge news off the Dow with its surprising buy of Covidien.

Jun 16, 2014 at 2:30PM
Daily Fool

Stocks have bounced all around today, with the Dow Jones Industrial Average (DJINDICES:^DJI) up 10 points as of 2:35 p.m. EDT and its 30 member stocks split nearly even between risers and losers. Upbeat economic data has pushed Home Depot (NYSE:HD) higher, joining with Chevron (NYSE:CVX) to lead the Dow's stocks in the green so far. Meanwhile, a huge deal from the health-care sector sent Covidien's (NYSE:COV) shares surging. Let's look at what you need to know.

Home Depot ready to run?
Homebuilder confidence took a huge hit after the recession as the housing market dried up, but the measure has slowly climbed back up in the recent past. In June, homebuilder confidence climbed up four full points to a reading of 49, according to the National Association of Home Builders and Wells Fargo. That's still below the neutral mark of 50 that shows homebuilders are neither optimistic nor pessimistic about housing sales, but nonetheless it's the best monthly reading since January.

Hoime Depot Pa

Source: Wikimedia Commons.

Signs point to an upbeat future in home sales as consumers grow more confident about the economy's slow but steady rise, and a bump here would mean great things for Home Depot heading forward. The home-improvement retailer's stock has lost more than 4.8% so far this year despite gaining 1.1% today, but the company has offered hope for investors by overcoming the unseasonably harsh winter to keep sales and earnings on the upswing in its most recent quarter. Same-store sales growth jumped by more than 3% in that quarter; if home sales can make a push in the summer and chart a growth for good long-term health, Home Depot will be well-positioned to reward investors -- and continue raising its strong 2.4% dividend into the future.

Big Oil's Chevron was up 1.2% today following last Friday's sale of oil assets in Chad to the country's government for $1.3 billion. Lower production has hit the oil industry hard lately, and Chevron has been no exception: The company saw liquid production in the U.S. decline by 4% year over year in its most recent quarter. While the recent uptick in oil prices due to instability in the Middle East should benefit the company, that's not a trend that Chevron or its investors can rely on for the long term. Shareholders need to keep an eye on Chevron projects that are expected to contribute to growth in the coming years and support this stock's run.

Perhaps the biggest market-shaking news of the day hasn't come from the Dow, however. In a deal of mammoth proportions, Medtronic (NYSE:MDT), the market's largest pure medical device player, agreed to acquire competitor Covidien in a deal worth nearly $43 billion. Medtronic is already a leader in the cardiac device space, but Covidien's acquisition will add laproscopic devices and surgical tools to the company's arsenal of products. Covidien's buy will also allow Medtronic to incorporate in Ireland, where it will face slightly lower taxes. The deal sent Covidien's stock surging by more than 20%, although Medtronic's shares have taken a 1% hit.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Chevron, Covidien, and Home Depot. The Motley Fool owns shares of Medtronic. 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.

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