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.
After yesterday's reversal in the Dow Jones Industrial Average (^DJI 0.56%), investors weren't sure whether the stock market was setting itself up for a big correction. This morning, though, the Dow didn't hesitate to push back above the 16,000 mark, rising 30 points as of 11 a.m. EST as investors continue to see few reasons to change their generally bullish hypothesis. Helping the Dow to rise were Home Depot (HD 0.74%) and JPMorgan Chase (JPM 2.51%), while Microsoft (MSFT -1.27%) suffered minor losses that held the index back somewhat.
Home Depot led the Dow higher with a 1.9% gain after reporting solid earnings results for its third quarter. Revenue climbed 7.4% in the quarter, helping lift operating income by 32% from the year-ago period on the strength of rising customer traffic, as well as higher average purchase amounts per customer. Improved guidance also encouraged shareholders to get more bullish. Even at relatively high valuations, Home Depot could see further gains as long as the broader economic expansion remains intact.
JPMorgan Chase also helped the Dow rise this morning, climbing 1.2% as investors wait to see if the bank will finalize its settlement with the Department of Justice today. With expectations of a $13 billion deal that will include $4 billion for homeowners affected by its mortgage practices, JPMorgan hopes the settlement will mark the end of another painful episode from the financial crisis. Yet with billions more in future settlements likely, investors have to wonder how much longer JPMorgan will face similar allegations -- and how much settlement bleeding the stock can absorb.
Microsoft declined 0.7% as the company waits to see if Nokia (NOK 2.03%) shareholders will approve Microsoft's offer to acquire Nokia's mobile-phone division. Analysts expect the $7.2 billion deal to go through, but they're less certain whether Microsoft's gambit to capture a larger share of the smartphone and mobile-device market will bear fruit. After so many past disappointments, Microsoft still lags its peers by a substantial margin, leading many to question the value of the company's efforts to expand its presence in mobile.
