Why the Dow Dropped 113 Points but These Stocks Rose

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.

At least in the eyes of most financial media sources, investors can't get past their lack of understanding about how the Federal Reserve will handle stepping back from its most aggressive quantitative easing measures. This time, it was St. Louis Federal Reserve head James Bullard speaking about the future of the Fed's monetary policy moves that helped move markets, as he noted that inflation hasn't been a major concern -- a fact that today's modest reading on the Producer Price Index only confirmed. Yet bond yields remained at a stubbornly high level above 2.7% for the 10-year Treasury, the Dow Jones Industrials (DJINDICES:^DJI) closed the day down 113 points, with broader-market measures falling a slightly more modest half-percent or so for the session.

But a few stocks posted gains even with the Dow's triple-digit decline. Bank of America (NYSE:BAC) picked up about 0.6% in response to its being chosen by financial peer Morgan Stanley as one of its top investment ideas, nothing that cost-reduction efforts should help the company retain more of its revenue. Meanwhile, wider interest rate spreads could help boost net interest income, helping to offset any negative impact on mortgage-related revenue if housing activity falls.

Microsoft (NASDAQ:MSFT) gained 0.4% even as it made a couple of key product announcements. On one hand, the tech giant said that it would delay its Xbox One release in several smaller European markets until next year in order to make sure that it has enough consoles available for its launch in key larger markets. The company also said that it will release its Windows 8.1 update on Oct. 17, with some analysts believing that the fix could well help boost sales of the operating system after having posted disappointing figures all year long since its late-2012 Windows 8 release.

Finally, looking beyond the Dow, Brocade Communications (NASDAQ:BRCD) soared 16% after a positive earnings release. Despite some challenges in the networking-storage market, Brocade managed to improve operating margins thanks to cost-cutting efforts, and it also gave favorable guidance for the current quarter. Still, cost-cutting can only go so far, and a 3% drop in revenue is still troubling even if the figure came in above expectations. It'll take a recovery from drops in government spending to help Brocade post its best possible results in future quarters.