The Dow Succumbs to Scary Economic News as ExxonMobil, Chevron Fall

Some worries on the economic front would ordinarily have made investors sell off stocks, but the Dow Jones Industrials was down only slightly.

Jun 17, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) had lost a slim eight points as of 11 a.m. EDT Tuesday. Investors let a couple of troubling economic reports dampen their enthusiasm, as inflation at the consumer level rose more than expected last month while housing starts fell substantially. Financial stocks still posted solid gains, but energy giants ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) helped drag the Dow lower, reflecting the uncertainty in the oil market as participants try to assess the impact of sectarian fighting in Iraq.

Source: Chevron.

The news from the Middle East shows few signs of getting better anytime soon, as the Obama administration sent added security personnel to protect the U.S. Embassy in Baghdad and is reportedly weighing the possibility of sending special operations forces troops to assist the Iraqi military in holding off insurgent activity. Early pronouncements from the Obama administration emphasized its desire not to send regular ground troops back to Iraq, but the situation militarily remains in flux.

Yet from an economic standpoint, markets aren't reacting much further to the news. Oil prices actually fell back slightly today, with West Texas Intermediate crude holding below $107 per barrel. Given the moves upward that ExxonMobil and Chevron made following the spike in oil prices after the initial word of the conflict inside Iraq, short-term traders appear to believe that the current trajectory of hostilities is already baked into oil prices, and therefore the upside left for the Dow's energy stocks isn't as great as some investors might think at first glance.

Source: ExxonMobil.

Moreover, both Chevron and ExxonMobil have taken steps to keep things business as usual in their global operations. Late last week, Chevron sold off about $1.3 billion in assets to the government of Chad, including a 25% interest in oil fields in the African nation's Doba Basin and a pipeline system to carry crude oil to the African coast in Cameroon. The move should allow the company to focus more on what it considers to be its highest-potential projects in ongoing efforts to keep production levels high. Meanwhile, ExxonMobil yesterday reaffirmed its commitment to its Russian business opportunities, with CEO Rex Tillerson speaking in Moscow despite the ongoing tension between the U.S. and Russia over events in Ukraine.

Developments in Iraq could obviously have a major impact on oil prices, as they have in the past. For investors in the Dow Jones Industrials, looking at how Chevron and ExxonMobil react to changing conditions will help in assessing risk levels both in the energy markets and to the stock market overall.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chevron. 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.

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information