The Rising Dow Didn't Lift These Stocks

It's always interesting to watch the action in the stock market on the day before an important piece of potentially market-moving news comes out. It would have been logical for stocks to tread water today in anticipation of tomorrow morning's employment report, which investors will look at closely to try to figure out how the Federal Reserve is likely to respond in managing its ongoing stimulus efforts. But, after some early jitters, stocks actually performed quite well today, as the Dow Jones Industrials rose 80 points, and climbed back above the 15,000 level. The broader market was up even more sharply, with the S&P 500 gaining 0.85%.

Some stocks didn't manage to recover from early losses, however. Chevron finished the day down 0.8%, extending its losses over the past few days. Given crude oil's price gain of nearly $1 per barrel today, most of Chevron's energy-company peers managed to post at least modest rebounds today, even though the sector has underperformed the broader market throughout the rally of the past six months. Investors might be concerned that the unfreezing of the company's assets in Argentina might lead Chevron to make greater investment in the country, potentially exposing it to future nationalizations of assets that could end up costing Chevron even more in lost assets. Avoiding political risk will be key for the company as it navigates various world energy markets.

Caterpillar lost half a percent, even as gold and silver prices posted modest gains. Caterpillar finds itself in a difficult position, as low metals prices will likely force many of its mining-company clients to delay or downsize purchases of capital equipment. Ordinarily, cyclical economic improvement would bode well for the company, but to the extent that improving conditions lead to less monetary accommodation from central banks, prices of metals could fall further, and jeopardize that part of Caterpillar's business, even if construction and infrastructure activity pick up. That will be a difficult line for the company to walk in the year ahead.

Finally, outside the Dow, VeriFone Systems plunged more than 20% after missing earnings expectations, and issuing poor guidance for the current quarter. Given the huge potential that the company has in expanding into mobile payment systems, VeriFone has thus far failed to deliver on its promise, and investors clearly don't believe that the company's turnaround efforts are likely to succeed amid huge amounts of competition in the space.

Caterpillar leads its industry in market share, but despite its competitive advantages, poor conditions throughout the industry have hurt the stock lately. Read all about Caterpillar's strengths and weaknesses in The Motley Fool's brand new report. Just click here to access it now.

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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 Chevron. 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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