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.
As is to be expected after such a momentous day, the stock market has calmed down substantially this morning. Content to consolidate their big gains after the Federal Reserve showed unexpected restraint in choosing not to reduce its quantitative-easing efforts, traders kept the market close to the unchanged mark in the first hour of trading, with the Dow Jones Industrials (INDEX: ^DJI) down just 20 points as of 10:50 a.m. EDT. With the Fed's decision in the books, economic reports took the spotlight, with existing-home sales rising to their best levels since early 2007.
Global markets played catch-up overnight, reflecting the worldwide optimism that the Fed created yesterday. Yet investors have to keep in the back of their minds that we'll likely see the same scenario play out again late next month at the Federal Open Market Committee's next meeting -- and also in mid-December if the Fed hasn't made its anticipated path clearer before then. Any positive impact of having QE at full strength for a few extra months should be minimal in the long run, making big jumps in stock prices based on QE unjustified.
The same is true, to a large extent, of individual stocks. JPMorgan (NYSE: JPM) has dropped after regulators hit the bank with $920 million in fines related to last year's London-office trading scandal last year. The SEC and the Fed both set $200 million fines, while the OCC joined in with $300 million and regulators in the U.K. added $220 million. As a condition of the settlement, JPMorgan also formally admitted its mistakes. Yet with 3.75 billion shares outstanding, the fine amounts to less than $0.25 per share -- an insignificant blip in its long-range prospects.
Positive impacts could prove equally fleeting. Home Depot (NYSE: HD) has jumped another 1.1% as the home-sales data and lower interest rates combine to build optimism over the potential for its continued success in the home-improvement business. Yet if the mortgage market is really as vulnerable to rate movements as the huge declines in mortgage applications recently would suggest, a temporary moratorium on QE cuts from the Fed won't stem the long-term tide. Home Depot will rather have to use its past experience to counter any negative impact of rates.
Focusing on long-term prospects is your best investing move. Boeing's (NYSE: BA) 1.2% rise this morning might be justified by multiple orders, as the aviation services division of General Electric's (NYSE: GE) GE Capital completed plans to buy 10 Dreamliners from Boeing to add onto a recent purchase from Lufthansa. GE recognizes the need to buy updated planes in order to take full advantage of improved fuel-efficiency, but investors should be well-served by Boeing's success in building desirable aircraft that take full advantage of technological advances and help all of its customers make more money in the long run.
Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Home Depot. The Motley Fool owns shares of General Electric and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.