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.
Traders thought they knew what they had coming this week, which was light on significant economic reports but included a Federal Reserve Open Markets Committee meeting. This is the group that decides what short-term interest rates should be and the fate of the much-talked-about $85 billion-per-month asset-purchase program. Most people would have told you before the meeting that the Fed would begin "tapering" asset purchases this month in an effort to begin pulling back monetary stimulus and slowly let interest rates rise. But the Fed threw a curveball and kept the program in place, sending the market into a frenzy Wednesday.
This is just a short delay to the eventual "tapering," but even that can wreck havoc on the markets in the short term. With the help of Wednesday's bump, the Dow Jones Industrial Average (^DJI 1.73%) was up 0.49% this week and the S&P 500 (^GSPC 1.67%) rose 1.30%.
Boeing (BA 1.96%) led the Dow with a 4.8% pop for the week. The company won $330 million in contracts from the Department of Defense to build UAVs and special operations helicopters. It also won a contract to build 34 new jets for German airline Lufthansa, part of $19 billion in contracts the company handed out. There's been a major push to upgrade and expand aircraft fleets this year, and that's to the benefit of Boeing, which has more than $410 billion in backlog and growing.
Travelers (TRV 2.08%) was up 3%, driven primarily by an analyst upgrade late in the week. FBR Capital upgraded the stock to outperform and raised its price target to $94, which would be about a 9% upside over the next year. Keep in mind that one of the major ways insurers make money is by investing the float, or assets held in custody for insurance clients, and when interest rates are low it takes returns from bond investments. So in a way, the Fed's decision was a negative for the company, even though this was the second best stock on the Dow this week.
Rounding out the top three is American Express, which rose 2.7%. There wasn't any significant news out about the company, but with exposure to both consumer transactions and credit risk through its credit card business, it would love to see more economic growth. While the Fed's decision may pump up a stock like this, short-term investors in American Express should really be cheering for an economy strong enough to stand on its own without the support of stimulus.
