Why the Dow Limped Into the Week
Three out of four blue-chip stocks backtracked on Monday as Wall Street considered June's slip in U.S. home orders and anticipated the beginning of the two-day Federal Open Market Committee meeting tomorrow. The slowdown in home sales, while sounding ominous, should be taken with a grain of salt: Sales fell just 0.4% from May, when they reached a six-and-a-half-year high. The Fed, while expected to keep rates absurdly low this week, has investors on edge as markets worry loose money policies may be ending soon. The Dow Jones Industrial Average fell 36 points, or 0.2%, to end at 15,521.
Caterpillar stock refused to lose -- as it had in the previous four trading sessions -- and added 1.2% after announcing a $1 billion share buyback plan. The shares in particular will be bought back from a French bank. With a market cap around $54 billion, the repurchase agreement will materially reduce the number of shares outstanding, spreading the company's earnings among a smaller pool of shareholders. Caterpillar seems to think its stock is pretty cheap right now. It also bought back $1 billion of its stock in June.
Telecom was the best-performing sector of the day, and Verizon Communications played its own bullish role, tacking on 0.9%. It's looking like more and more of a sure thing that Verizon will expand its wireless network into Canada to boost its pool of potential customers. The would-be Canadian competition is taking notice, too: The Canadian Industry minister is sitting down with the country's anxious top telecom execs today to ease their concerns over Verizon's invasion.
Hewlett-Packard , on the other hand, hasn't been causing any skittish foreign execs to huddle with top lawmakers recently. While HP is the second-largest global PC vendor by volume, it was the first-largest last year. Not only that but the PC market itself is on a well-publicized secular decline caused largely by the surging tablet market, a fact highlighted in a Sunday New York Times article. HP shares lost 1.2% Monday.
Finally, Bank of America shed 1.4% as Philadelphia became the latest municipality to file suit against banks allegedly involved in the widespread Libor interest rate fixing case. Philadelphia claims that between 2009 and 2011, the city was essentially scammed out of more than $100 million by an illegal collusion by major banks misreporting real interest rates. In a separate case today, the Charlotte-based bank was sent back to court for mishandling a loan to a casino development project in the midst of the financial crisis.
The U.S. government has piled on more than $10 trillion of new debt since 2000. Annual deficits topped $1 trillion after the financial crisis. Millions of Americans have asked: What the heck is going on? The Motley Fool's new free report, "Everything You Need to Know About the National Debt," walks you through with step-by-step explanations about how the government spends your money, where it gets tax revenue from, the future of spending, and what a $16 trillion debt means for our future. Click here to read the full report.
The article Why the Dow Limped Into the Week originally appeared on Fool.com.Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine . The Motley Fool recommends and owns shares of Bank of America. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.