Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
On Tuesday it seemed like the world was about to end when the U.S. threatened a military strike against Syria. The Dow Jones Industrial Average (DJINDICES:^DJI) fell 170 points, the S&P 500 (SNPINDEX:^GSPC) dropped 26 points, and it appeared a market pullback was as imminent as air strikes in the Middle East. But the market is incredibly unpredictable, and stocks are up for a second day in a row, though only marginally: The Dow is up 0.09% late in trading, and the S&P 500 up 0.17%. Just goes to show that timing the market on a day-to-day basis can be a fool's errand.
The two data points helping stocks today are a 6,000-person drop in jobless claims to 331,000 last week and a second-quarter GDP revision up to 2.5% from 1.7%. Neither results are earth-shaking, but a slow and steady improvement in the economy is about all we can expect right now.
The up-and-down gyrations of ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) continued today, with the stocks falling 1.3% and 1.3%, respectively. Yesterday the stocks rose on higher oil prices, but I warned that higher prices may not actually lead to higher profits, and today that realization, along with oil's 1.1% drop to less than $109, has killed the energy exuberance. I'd be careful buying Big Oil stocks just because oil is up, because these companies also need higher gas prices to generate profits, and gas prices haven't kept up with oil in recent weeks.
The big mover on the Dow is Verizon (NYSE:VZ), up 2.7% on speculation that it will finally complete a buyout of the 45% stake in Verizon Wireless owned by Vodafone. This deal has been discussed for years, but there's increasing urgency because interest rates are rising and Verizon could soon be unable to borrow enough to complete a deal. The rumored buyout figure is $130 billion, which I think favors Vodafone but will be a long-term positive for both sides. I don't think Verizon will pop when a deal is announced, so waiting to buy into the Verizon Wireless buyout until after terms are announced won't likely cost investors much.