Dow Sapped of Energy, Loses Record Highs


The Dow Jones Industrial Average opened 10 points lower than its record-high close yesterday. Though yesterday's gains were boosted by positive economic data, investors seem to be pulling back due to continued uncertainty revolving around the Fed's plan for its stimulus policy. As of this writing, the Dow is down 172 points and headed lower.

Economic data releases are limited today, with only the MBA mortgage purchase application survey coming out this morning. The newest data shows an 8.8% decrease in application activity, driven by a 12% decrease in refinancing applications. Since refinancing activity accounts for 71% of the overall applications, this data is not necessarily a bad sign for the housing market. Purchase applications for new mortgages increased 3% versus the previous week, and with the recent home price data showing a rise in prices due to higher demand, mortgage applications may begin commanding a bigger share of the applications activity.

Inside the Dow
The two telecom titans, AT&T and Verizon, are trailing this morning as rumors have emerged that a new era of mobile communications from Google is coming soon. With Google Fiber potentially turning the industry on its head, the current leaders are taking a hit, with AT&T down 1.72% and Verizon losing 3.11%. But this is a story that we've heard before. Google has yet to bring a product to market that would send both AT&T and Verizon packing, so the two providers have nothing to worry about -- yet. Right now, the speculation may be taking its toll on the telecom leaders, but until Google puts its wares on the market it will remain just speculation.

Though the mortgage data would not be favorable to banks, both Bank of America and JPMorgan are up this morning. B of A is leading the charge with a 1.04% gain, while JPMorgan is experiencing a more modest rise of 0.1%. Both banks are reaping the rewards of a long-awaited event -- Moody's newly upgraded rating of the banking system. The change to "stable" from "negative" took five years, and the banks have worked hard to get it. With record earnings, improved capital reserves, and cleaner balance sheets, the banks have given Moody's plenty of evidence that the banking sector will continue to grow. Moody's outlook for the banks includes improved creditworthiness over the next 12 to 18 months, with fewer downside risks for the financial institutions.

Bank of America's rise this morning also comes before a big hearing date later in the week. Though it seems that the looming date isn't bothering investors quite yet, we could see a big swing in momentum for the bank if things don't go its way. At stake is the $8.5 billion settlement between the bank and 22 institutional investors over 530 mortgage trusts sold by the acquired Countrywide. Currently there seems to be a question up in the air that could change everything and leave B of A with a big bill to pay.

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