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.
Stocks moved higher again today as investors bet that the Federal Reserve would only make a modest cut to its bond-buying program. The central bank is meeting today and tomorrow to discuss what adjustments, if any, it will make to its $85 billion monthly purchases of treasuries and mortgage-backed bonds. The Federal Reserve's stimulus has been a major factor in the stock market's gains this year, and investors are hoping that a gradual taper will continue pumping up the economy. The Fed will announce its decision tomorrow afternoon. Stocks rose to near-record highs on the market, as the Dow Jones Industrial Average (^DJI 1.13%) gained 35 points, or 0.2%, to finish within 130 points of the all-time high it hit in early August.
On the Dow today, investors seemed encouraged by Microsoft's (MSFT 0.26%) big announcement of a new $40 billion share buyback program, and a 22% increase in its dividend. The market tends to respond warmly to efforts to return capital to shareholders, but Microsoft shares cooled off after jumping 2% at open, to finish up just 0.4%, in line with the broad market. The new share buyback program replaces the previous one of the same size, set to expire at the end of the month, and the dividend hike brings the yield to 3.4%, one of the highest in the Dow. Still, investors seemed to quickly remind themselves of greater concerns that the company's facing, such as the decline of PCs, and integrating Nokia's handset division after its recent acquisition.
Elsewhere, Intel (INTC 3.85%) finished up 1.5%, getting a boost from Credit Suisse, which raised its price target to $30, from $28. Analyst John Pitzer said, "We believe Intel is at an important inflection point, which should provide tangible evidence of a robust business model even in the post-PC era." Intel shares have jumped 5% in the last three sessions, but the company still faces serious challenges as PCs decline. Its recent momentum has come as it's scored recent wins with its newer Haswell chips and its decision to shut down an older plant in Massachusetts. Still, Intel has missed earnings estimates in its last two quarters, and there is far from any guarantee that it will achieve the same dominance in the mobile era as it's had with PCs.
Finally, Boeing (BA 2.67%) shares hit yet another record high, gaining 1.2% as its jumbo jet 787-9 completed its first test flight. The new plane can carry 40 more passengers than the current Dreamliner model on the market, and fly longer distances. More importantly, the successful flight seems to put the battery-fire debacle from the original 787 further in the past, and the aircraft-maker's stock benefited from the company taking further steps toward gaining a $7 billion defense contract from South Korea.
