On the eve of sequestration, the markets are on the verge of making history. The Dow Jones Industrial Average (^DJI 0.16%) has risen 69 points, or 0.49%, as of 2:20 p.m. EST. This puts the index less than 25 points from its all-time closing high, set in October 2007. Few members of the Dow are in the red today, and despite the looming threat of budget cuts slated to hit tomorrow, the markets are giving little heed to the drama on Capitol Hill.
Sequestration? Whatever.
Hope is fading for a sequestration deal on the day before cuts come into effect. It's reported that both political parties are prepared to introduce plans to subvert the cuts, but with such short notice, it's doubtful anything meaningful will be passed before tomorrow -- particularly with deep partisan divides still lingering over the balance of cuts and tax increases in balancing the budget. Regardless, not all of the cuts will hit tomorrow: Many will take time to phase in, gradually coming into effect through the end of the fiscal year in late September and giving the economy time to adjust accordingly.
Stocks sure aren't sweating it out. Hewlett-Packard (HPQ 1.74%) in particular hasn't even batted an eyelash about sequestration, rising 2.3% so far today. HP CEO Meg Whitman said earlier in the week that her company is moving resources toward the mobile sector and away from PCs -- a move necessary to HP's future success, given the PC market's decline. The company also announced that it would sell Android-powered tablets, but while investors are happily sending the stock higher, HP still has a long road to go before its turnaround is complete. Don't expect every day to be as sunshiny as today.
Telecom stocks are also rising: Both Verizon and AT&T (T 1.54%) rank among the Dow's leaders, with shares gaining more than 1% each. AT&T recently announced that it has enough wireless spectrum for five years' worth of growth -- a good sign for investors -- but the company's also pushing the FCC to free up more wireless spectrum. If the FCC goes along with the plan, it's great news for AT&T's top line as many consumers opt for high-capacity data plans that fuel the company's margins.
Finally, Coca-Cola (KO +0.46%) is also on the rise, with shares picking up 1.3% so far today. The beverage maker has received a boost after it announced its first sale of benchmark bonds since last March. Ratings agency Standard & Poor's has kept a stable outlook on Coca-Cola's ratings, lauding the company's "conservative financial policy" and ability to limit financial risk.
