Dow Reverses, Advancing on Federal Reserve Nominee

Dow Reverses, Advancing on Federal Reserve Nominee

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

After a two-day decline that had the Dow Jones Industrial Average take a nearly 300-point haircut, stocks edged cautiously higher on Wednesday after President Obama nominated Janet Yellen to be the next chairperson of the Federal Reserve. Yellen is seen as a dovish candidate, one who would be reluctant to rein in the Fed's stimulus infusions too dramatically or too quickly. With the debt ceiling debacle still at the forefront of investors' minds, the Dow managed to tack on 26 points, or 0.2%.

AT&T led the blue-chip index higher, gaining 1.9% as the telecom sector ended as the best-performing area of the markets. There's talk that AT&T is looking to Europe for an acquisition in order to fuel future growth, which would greatly expand the carrier's subscriber base. While that sounds like a no-brainer, the trouble with Europe is its pesky regulations -- which aren't standardized -- not to mention its stiff competition.

Ironically following the lead of the much-smaller Hewlett-Packard, shares of IBM were up 1.5% on Wednesday as bullish comments from HP CEO Meg Whitman at a meeting with analysts sent some tech stocks higher. Even though HP was recently booted from the Dow and IBM is the index's second-heaviest weighted component, Wall Street can't help itself, often treating news from one company as if it applied to its perceived peers as well.

Boeing lost 0.8% as markets digested news that Japan Airlines is dropping Boeing to go with competitor Airbus. Not only is this an obvious blow to Boeing's recurring revenue logged by having an agreement with an airline, but it casts doubt into the future of the company's supply chain. Boeing has typically gone to Japan for a big chunk of its components, but with the love only flowing one way, the aerospace giant may choose to take its business elsewhere.

Lastly, Merck shed 1% as Credit Suisse initiated coverage of the stock, awarding shares a neutral rating. For those unfamiliar with the world of Wall Street analysts, anything less than a buy recommendation is fairly disappointing. Then again, analysts are often one or two steps behind the game, touting the opportunity in a stock after a giant run-up or dismissing a stock as useless after it's sold off.

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