After a big decline of more than 200 points yesterday, the Dow Jones Industrials has spent the morning trading in a narrow range as investors wait for tomorrow's news on the U.S. employment picture. Although today's data included a drop in weekly unemployment claims that would ordinarily have spurred some optimism about tomorrow's report, investors aren't sure whether to root for a strong jobs report that would point to a healthier economy or for a weak report that would increase the odds of further accommodation from the Federal Reserve. That uncertainty kept the stock market near breakeven, with the Dow down two points as of 10:55 a.m. EDT.
But some stocks are bouncing back for shareholders. Home Depot has risen 2.2% after getting hit hard in recent days. Rising interest rates have made their way into the mortgage loan market, and that has investors fearing a potential reversal in the substantial home-price gains that the housing market has seen over the past year. Yet reports yesterday that private-equity company Kelso might try to sell off its Custom Building Products home-furnishings and construction manufacturer might have reminded investors that Home Depot might benefit from a potential IPO of its former HD Supply unit, in which it still retains a 12.5% stake.
In order to face the uncertainty in the economy, many companies have sought to restructure their internal businesses to boost efficiency and save on costs. Procter & Gamble came out yesterday with its expected reorganization plan, under which the company will divide into four divisions focusing on beauty, fabric and home care, health and grooming, and family care products. P&G also chose leaders for those divisions, and those leaders are all among the top candidates to take over for newly appointed CEO A. G. Lafley when he re-enters retirement. Given P&G's struggles in maintaining its leadership role in the consumer products industry, investors have to hope that the reorganization will create more of a sense of internal competition and urgency to improve results. The shares have risen a modest 0.1%.
Finally, outside the Dow, merger and acquisition rumors helped send SodaStream International up as much as 30% in premarket trading, but that gain has since been reduced to 5%. Before the market even opened, PepsiCo CEO Indra Nooyi denied rumors that the company was considering buying the home-carbonation system manufacturer, but even after the denial, the stock opened as much as 10% higher before falling back to current levels. The episode proves that anyone who believes markets are efficient hasn't seen the stock market in action, as the stock-price action indicates delays in who saw various pieces of information at what time.
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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Home Depot, PepsiCo, Procter & Gamble, and SodaStream. The Motley Fool owns shares of PepsiCo and SodaStream. 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.
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