The Dow Approaches 17,000 as ExxonMobil, Chevron Give Mixed Signals

The Dow Jones Industrials climbed into would-be record territory Friday morning even as investors remain concerned about markets and global conflict.

Jun 20, 2014 at 11:00AM
Longview

The Dow Jones Industrials (DJINDICES:^DJI) built on its upward momentum Friday morning, gaining 47 points as of 11 a.m. EDT to trade above the index's record closing high set earlier this month. Even though trouble in the Middle East presents a constant risk for stocks, market participants appear focused more on the gently rising U.S. economy and the accelerating pace of mergers and acquisitions that have lifted many individual companies' stocks in recent months. In the energy arena, ExxonMobil (NYSE:XOM) has tacked on 1% this morning while Chevron (NYSE:CVX) fell back slightly.

Responding to Iraq
Oil prices have been volatile lately, but today's oil-market moves showed some of the uncertainty investors have about the immediate future. West Texas Intermediate crude futures moved up by about $0.50 per barrel, getting close to the $107 level for the July contract. Yet Brent crude futures, which reflect prices on the world market, dropped a bit through the $115 mark. Natural-gas prices also eased back by about 1%.

G

Given its role as one of the world's largest oil producers, the situation in Iraq is something that Dow Jones Industrials investors are clearly keeping a close eye on. At this point, the U.S. has dedicated a small number of troops to assist the Iraqi national army in the battle against insurgents, but the domestic political situation is delicate as the Obama administration works to avoid getting mired militarily in the region again.

None of this explains why ExxonMobil and Chevron are moving in different directions today, as both companies have some exposure to Iraq. Nevertheless, even lucrative opportunities in the Kurdish region of northern Iraq aren't so substantial that they would crush the companies' earnings results. Both Dow energy giants are geographically diversified enough to withstand any direct hit from reduced exploration activity in Iraq.

Xom Weird Apocalyptic Mark Rain Flickr

Photo credit: Flickr/Mark Rain.

The bigger question is what impact sustained higher energy prices would have on the global economy if the Iraqi situation flares up for the long run. Up to a point, a price spike would simply add to Chevron's and Exxon's profits. But beyond certain levels, reductions in demand would become cost-effective for oil consumers, and that could hurt long-term prospects for the Dow energy components.

Iraq will remain a flash point geopolitically until the situation resolves itself, and given the long-held animosity among groups within that country, it's unlikely a quick solution will present itself. The Dow Jones Industrials will take their cues in large part from how ExxonMobil and Chevron respond to the situation; for now, energy investors are benefiting from their willingness to take on that risk.

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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers