Washington Weighs on the Dow's Triple-Digit Dive
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.
Washington's political standoff has crept up on the markets today, and investors are feeling the hit from the battle over the pending government shutdown. The Dow Jones Industrial Average has lost almost 100 points by 2:30 p.m. EDT as investors digest what policymakers' divide could mean for the markets. Stocks are mostly in the red across every industry. Let's catch up on what you need to know.
Why worry about Washington?
Would a shutdown be as bad as some analysts have cautioned? It's key for investors to keep an eye on the long term, and the reality is that it's highly unlikely that Washington will get locked in a stalemate over the issue for any significant amount of time -- especially with the debt-ceiling battle coming right on the heels of this standoff. As fellow analyst Alex Dumortier points out, America's longest government shutdown in history lasted only 21 days and cost the S&P 500 a mere 2.7% in lost value. That's not exactly an investor apocalypse. Furthermore, it's unlikely that a shutdown even of that magnitude would cost the U.S. economy much in lost growth. Most businesses still are humming through Washington's clash.
As usual, the action of individual stocks and companies is what investors should watch. Coca-Cola is down 1.6% today, ranking among the Dow's biggest losers so far. There's not much news that has bumped the stock down, but an interesting report for investors and shareholders emerged today from brand consulting firm Interbrand: Coke's lost the top position as the world's most valuable brand, ceding its coveted spot to Apple in 2013.
Apple's brand worth grew 28% year over year as estimated by Interbrand, rising to a value of $98.3 billion. That was significantly more growth than Coca-Cola's 2% year-over-year rise in 2013 to a total brand worth of $79.2 billion, although Coke still held onto the No. 3 position. The soft-drink icon has been a fixture for years among the world's most popular and recognizable brands, and losing ground to Apple and No. 2 brand Google hardly is room for panic.
Indeed, Coke's business has been churning out growth recently even as public sentiment in Europe and North America has turned tepid toward soft drinks. The company still managed 2% concentrate volume growth year over year in the first half of 2013, despite a 3% downturn in Europe. Eurasia and Africa's strong growth -- 8% for the first half -- has helped power Coke's global strength, and emerging markets such as Africa, India, and other areas that have yet to be tapped fully by the industry's powers are becoming Coca-Cola's critical targets of the future.
Procter & Gamble is leading the Dow down today, with shares falling about 1.8%. This stock has had a bumpy ride, losing about 1% over the past month, particularly as investors have questioned the company's lagging growth. P&G has failed to drive its net margin back up to levels from a few years ago after the figure slumped in fiscal 2012, falling from 14.4% to 11.1%. The company managed to raise its profit margin to 13.5% in fiscal 2013, but investors will be looking for more from P&G as consumer confidence in the U.S. rises and Americans return to spending more on consumer goods.
The long-term track for your portfolio
Procter & Gamble and Coca Cola have long been testaments to the investor's easiest path to financial success: choosing great companies and sticking with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article Washington Weighs on the Dow's Triple-Digit Dive originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Apple, Coca-Cola, Google, and Procter & Gamble. The Motley Fool owns shares of Apple and Google. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.