One of the most distinctive characteristics of the bull market over the past four years has been its resiliency. In the face of ongoing challenges, the Dow Jones Industrials (^DJI +1.79%) have found ways to push higher, even during times of uncertainty. But recently the stock market has encountered more resistance. This morning's movements in the Dow provide a good example, as the Dow opened to gains of more than 100 points before giving back nearly all of that ground within the first 45 minutes of trading. As of 10:55 a.m. EDT the Dow was within a point of breakeven, but the presence of cross-currents in both directions shows just how uncertain investors are about the future.
Arguing against that conclusion, though, is the substantial strength underlying today's small moves. The majority of the Dow's components are up this morning, with Hewlett-Packard (HPQ +0.81%) leading the way with a nearly 4% gain. CEO Meg Whitman has done a masterful job of gradually raising investors' expectations for the company's future. An interview this morning pointed to the possibility of revenue growth as soon as next year. Whitman's challenge is dealing with short-term-oriented investors in the midst of a process that will take years to complete, but so far the stock has reacted quite favorably now that HP has been able to point to incremental successes in its business.
At the other end of the spectrum is American Express (AXP +1.75%), which is down about 1%. The card company is still well-known for its international services, and with highly publicized unrest in Turkey adding to conflicts in other parts of the world, some of AmEx's recent weakness could be tied to fears that international travel might decline as a result. Still, investors should focus more on the company's domestic prospects, especially in light of favorable trends that have brought delinquency rates down and credit quality up.
Finally, beyond the Dow, the end of earnings season and M&A activity continued to move stocks. Ulta Salon (ULTA +2.61%) has soared 15.6% after it released favorable results, including same-store sales gains of 6.7% and a 23% increase in overall revenue. Somewhat weak guidance for the current quarter wasn't enough to slow the stock's advance. Meanwhile, Cooper Tire (CTB +0.00%) launched 40% higher after getting a $35 per-share buyout bid from Indian company Apollo Tyres. If companies see value even as the stock market pauses or corrects, then further acquisition activity could well spur the market's bull run onward.
