Dow Decides Syria Is Actually Good for Business
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After a two-day slide on Syria developments, the Dow Jones Industrial Average bounced back today, seemingly on the same news as energy stocks rose with oil prices. Crude futures hit two-year highs earlier, hovering around $110 a barrel on concerns of a U.S.-led strike, although Syria is not itself a major oil producer. Its oil production has declined from 350,000 barrels a day in March to just 50,000, and the country has been banned from exporting crude since sanctions went into effect in 2011. However, prices have risen on concerns that the simmering conflict could destabilize the region, as it's serving as a proxy battle between Saudi Sunnis and Iranian Shiites. The jump in energy prices sent shares of the Dow's two oil majors, ExxonMobil and Chevron , up 2.3% and 2.5%, respectively. After both companies posted disappointing quarters in their latest reports, rising energy prices should help them overcome structural weaknesses and declining production in the short term.
Elsewhere, the housing market got more negative news as pending home sales fell 1.3% in July, while economists had predicted a gain of 0.2%. As mortgage rates have risen with expectations of the Federal Reserve's stimulus taper, the housing recovery has cooled off this summer. In a separate report, mortgage applications also fell 2.4% last week, its third straight weekly decline.
Elsewhere on the Dow, Procter & Gamble was the worst performer, falling 1.4%. There was no company-specific news out on P&G today, but the market may still be reacting to news reported this weekend that reinstated CEO A.G Lafley will not move to headquarters in Cincinnati, indicating that his return to the helm may be shorter than expected. Lafley replaced Bob McDonald, who retired after leading the company for four years of what many considered underwhelming returns. The consumer-goods giant seems to have hit a plateau as it struggles with finding ways to grow sales in its mature markets, which make up the bulk of its profits.
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