Big Oil's Struggles Drag on the Dow

Big Oil's Struggles Drag on the Dow

It's jobs report Friday, and the Department of Labor has reported that the U.S. economy added 162,000 jobs in July and the unemployment rate fell to 7.4%. That's not a fabulous growth rate, and it won't bring a quick economic recovery, but it also isn't all that surprising. Economists were expecting 180,000 jobs to be added, so the report is well within the margin of error and is approximately in line with the past two years.

Stock markets didn't have much of a reaction: The Dow Jones Industrial Average is down a meaningless two points late in trading, and the S&P 500 isn't moving any further. However, the 10-year Treasury Note yield fell 10 basis points to 3.69% on speculation that weak jobs numbers will keep the Fed's stimulus in place.

Hewlett-Packard is the big winner on the Dow today, jumping 2.9%. There were early reports that Carl Icahn had taken a stake in the company, but CNBC is now reporting that he doesn't own shares in the company. In related news, Dell appears close to a buyout offer that increases the offer price to $13.75 per share, including a $0.13 special dividend and an $0.08 dividend for the third quarter.

The battle over Dell is an incremental positive for HP because it keeps the competitor distracted while HP attempts its turnaround. But the bottom line is that both companies are in a declining PC market, and I wouldn't expect growth to pick up anytime soon.

The other big mover is Chevron , which has fallen 1.6% following a disappointing earnings report. Net income dropped 26% in the second quarter versus the prior-year period, and revenue was down 8%. The company blamed lower oil prices and falling margins in the refining business for its struggles. In the long term, Big Oil will continue to struggle because consumer demand isn't increasing and it's becoming harder and more expensive to find oil. Both factors will put pressure on oil companies, and we could see profit continue to decline as the world looks to alternative energy sources for a growing portion of demand.

If the days of Big Oil are coming to an end, investors need to look at companies that are taking its place in energy. The Motley Fool is offering a comprehensive look at three energy companies set to soar as the energy industry adjusts to a new normal. To find out which three companies are spreading their wings, check out the special free report "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.

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Fool contributor Travis Hoium has no position in any stocks mentioned. 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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