The Dow Deflects European Debt Bullet
With the Greek elections now in the books, forming a coalition government and working out a detailed pro-bailout strategy is now the top priority for Greece's new conservative party leader, Antonis Samaras. Despite the conservative New Democracy's narrow victory yesterday, the eurozone is still in as precarious shape as ever. Greece can now take another small step in order to heal its debt wounds, as Spain's issues are worsening by the day, with yields on its 10-year notes reaching over 7%.
After opening in the red, the broad markets have been edging higher, with the Dow Jones Industrials (INDEX: ^DJI) up 0.10%. Nasdaq shrugged off its early fatigue, gaining 85 basis points so far today, as Internet software and services companies are soaring. Facebook (NAS: FB) has increased 6.55% so far today as the company acquired aptly named Face.com. Also making noise is Facebook's troubled social-gaming supplier Zynga (NAS: ZNGA) , up 7% today, after coming off a 60% slide over the past three months. However, the king of Nasdaq tech stocks today is Groupon, up 10% after Morgan Stanley upgraded the company to "overweight."
The worst-performing stocks today are those closely levered with international growth. Similar to the broad markets, July crude futures plummeted early on but have been steadily gaining today. Chevron is down 50 basis points as it was one of a few dozen energy companies to have its credit rating reduced by Raymond James, which has taken a negative outlook on future oil prices.
It appears investors in offshore drilling also have a negative outlook on oil prices as Hercules Offshore (NAS: HERO) and ATP Oil and Gas (NAS: ATPG) have each lost close to one-tenth of their value today. The heavy price reaction is typically magnified for offshore producers because they are more vulnerable to price fluctuations since their cost structure is significantly higher than that of traditional onshore drillers.
Going the distance
The eurozone debt issues are going to get worse before they get better, meaning volatility will be in excess going forward. A long-term approach is the smart way to invest, and this method is exceedingly important in volatile times. Market uncertainty invites investors to move their money into low-risk and low-yield securities. However, with U.S. 10-year Treasuries yielding a dismal 1.59%, smart, long-term investors should purchase outstanding companies with dividends that trump current Treasury yields. With this mind-set, you can receive superior yields via dividends, while still owning great companies with balance sheets that can guide them through difficult stretches. For those of you looking for some of these great companies, check out this free report: "The 3 Dow Stocks Dividend Investors Need." This report is absolutely free, so click here to get your copy today.
At the time this article was published Joel South owns shares of no company listed above. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Hercules Offshore and Chevron. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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