Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The blue chips fell for the fourth day this week, giving it its first losing week since June, as earlier statements from the Fed hinted that the stimulus taper could begin as early as next month. Today, the Dow Jones Industrial Average (DJINDICES:^DJI) finished down 72 points, or 0.5%. With no significant economic reports released today and low trading volume, stocks simply seemed to fall back on the Fed statements from earlier in the week.
Despite the drop, not all Dow stocks took a hit. Alcoa (NYSE:AA) shares were flying higher, gaining 3.9% on a strong trade report out of China, as July exports rose 5.1%, and imports were up 10.9%. The increase in imports was a particularly promising sign for Alcoa, as the aluminum maker is heavily dependent on demand from China and its construction market. The recovery in trade is also good news after a sluggish first half of the year for the Chinese economy. Among other moves, the Chinese government has temporarily removed taxes on small businesses as a stimulus measure. Caterpillar shares also moved up 0.6% today after a 1.9% jump yesterday on similar news.
Leading the Dow's fall today was Disney (NYSE:DIS), which has had a forgettable week since posting earnings Tuesday night, as shares are down more than 5% since then, and today lost 1.6%. The earnings report wasn't terrible, but Disney did warn it would take a $190 million charge for The Lone Ranger flop. With shares already up 30% so far this year, and no significant profit increase reported in the second quarter, the stock is probably ready for a breather.
Finally, Home Depot (NYSE:HD) continued its volatile week today, falling 1.3%, as investors fear that the Fed taper could cool off the housing recovery. Like Disney, Home Depot shares have been bid up extensively this year amid the housing comeback, climbing 30%, as well, on the back of the recovery. But the home-improvement retailer now trades at a trailing P/E of 25, which will be hard to justify if interest rates continue to rise and the housing market cools off. The retailer will report earnings August 20; analysts are expecting earnings of $1.20 per share.