Dow Afternoon Report: Financials and ExxonMobil Jump Higher
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.
The Dow Jones Industrial Average is up as markets continue their relentless surge forward. The DJIA is being pulled up by the financial sector, as Federal Reserve chair-designate Janet Yellen's confirmation hearing yesterday reinforced investors' views that the Fed's stimulus policies will continue. However, ExxonMobil is the Dow's leader today after it was reported that Warren Buffett had taken a $3.5 billion stake in the oil major.
As of 1:33 p.m. EST the Dow was up 44 points to 15,920. The S&P 500 was up two points to 1,793.
Speaking yesterday before the Senate Banking Committee, Yellen said she wants to see a self-sustaining recovery before the Federal Reserve eases up its stimulus efforts. She noted: "A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy." All signs indicate that Yellen will continue the policies of current Chairman Ben Bernanke, meaning a zero-interest-rate policy and continued large-scale asset purchases.
Yellen suggested an addition to the Federal Reserve's dual mandate of full employment and low and stable inflation: "a safe and sound financial system." Regulators around the world have pursued this by increasing capital requirements for banks, as well as requiring yearly stress tests. However, the problem of too-big-too-fail banks still persists, and it is unclear what unintended effects are being created by the Fed's continued stimulus and rising balance sheet, now at $4 trillion. As the U.S. financial system grows further centralized around the Fed, the risk of a shock to the system doing real damage increases.
While many investors are sitting on the sidelines, there was news today that Warren Buffett has bought a 40 million-share stake in ExxonMobil. This is Berkshire's largest outright purchase since it invested $10 billion in IBM in 2011. While that's a big investment, Berkshire's total portfolio is worth roughly $100 billion, so this is a just a 3% position within those holdings.
ExxonMobil isn't Warren Buffett's only energy investment. One behind-the-scenes energy giant that is part of the Berkshire Hathaway portfolio is at the center of the technological revolution in the oil and gas industry. This movement is what has positioned America to regain the title of worlds largest oil producer, and give OPEC a big headache to boot. In our brand-new Motley Fool report, we give the skinny on the company we're calling "OPEC's Worst Nightmare." Just click here to uncover the name of this industry-leading stock and join Buffett in his quest for a veritable landslide of profits! Simply click here and we'll give you free access to this valuable investing resource.
The article Dow Afternoon Report: Financials and ExxonMobil Jump Higher originally appeared on Fool.com.
Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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