Evening Dow Report: Exxon, IBM Lift Dow to 50th Record Close; JPMorgan Drops
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 holiday season has been a kind one for the Dow Jones Industrials , which managed to continue its six-day run of new record highs with a triple-digit gain Thursday. Favorable news on jobless claims, and a rosy picture of retail performance, helped send the Dow up 122 points on the day, marking its 50th record close during 2013, and leading the other major market benchmarks higher, as well. ExxonMobil and IBM were the biggest percentage gainers on the day, while JPMorgan Chase was the sole member of the Dow not to rise.
Exxon climbed 1.7%, vaulting above the $100 per-share mark for the first time in its history. Domestic oil prices also neared the $100 mark, but Exxon's gains have largely come from the recognition that value investors like Warren Buffett believe that the oil giant can successfully overcome the challenges that its size poses for future growth. Even with huge opportunities in hard-to-reach areas of the world, Exxon faces a mammoth task in producing enough oil and gas to replace falling production on existing wells. Nevertheless, as the economic recovery seems to be taking greater hold both in the U.S. and around the world, rising energy demand could help support oil and gas prices, and give Exxon more support for its impressive bottom line and cash flow.
IBM rose 1.2%, perhaps simply on speculation that stocks that did badly in 2013 will bounce in 2014. Even as the sole falling stock in the Dow so far in 2013, IBM hasn't benefited from some of the typical trends that help losing stocks. With a dividend yield of just 2.1%, and a price-to-earnings ratio that still approaches 13, IBM isn't even the cheapest tech stock in the Dow, with rivals offering better yields and more turnaround potential. IBM's valuation is below the average Dow stock, but many tech investors would argue that there are better picks among megacap technology stocks than Big Blue.
JPMorgan lost 0.1%, with the likely culprit coming from the rise in Treasury bond yields today. Treasury yields briefly hit the 3% mark, and JPMorgan has previously said that it was vulnerable to rising bond yields because of its extensive portfolio holdings. The big question facing the bank is whether yields will rise further in light of the Fed's decision to ease off on quantitative easing-based bond purchases, but JPMorgan will also have to deal with ongoing regulatory threats that could cost the bank even more in fines, settlements, and other costs.
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The article Evening Dow Report: Exxon, IBM Lift Dow to 50th Record Close; JPMorgan Drops originally appeared on Fool.com.Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of IBM and JPMorgan Chase. 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.