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Dow Jones Today: Another Fed Holding Pattern

Todd Shriber

With Federal Reserve Chairman Jerome Powell slated to give remarks at the Jackson Hole, Wyoming summit later this week, it would not be surprising to see some sluggish days for stocks leading up to that event. Such was the case Tuesday.

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The meeting minutes of the Fed’s July meeting are coming out tomorrow, giving traders another reason for pause today. That release could provide details regarding just how unified the central bank is regarding more rate cuts this year.

Overall, it wasn’t a great day for stocks as highlighted by the fact that in late trading, just five of the 30 members of the Dow Jones Industrial Average were spotted higher, but it could have been worse. The Nasdaq Composite fell by 0.68% while the S&P 500 slipped 0.79%. The Dow Jones Industrial Average finished lower by 0.66%.

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From a broad asset perspective, not much worked today except for familiar friends gold and U.S. government debt. There was some risk-off sentiment permeating markets today following the resignation of Italy’s prime minister and more comment from President Donald Trump that he’s not quite ready to make a trade deal with China.

Let’s get into some of the names that moved the Dow Jones Industrial Average today.

Today’s Dow Winners

I have repeatedly mentioned the The Home Depot (NYSE:HD) in recent days simply because that was the lone looming marquee earnings report among Dow components for investors to digest. The stock soared 4.59% today following that report.

Atlanta-based Home Depot posted fiscal second-quarter earnings of $3.17 per share, beating Wall Street’s estimates of $3.08. More importantly, the stock rallied on what was some glum guidance from the company. Not only did Home Depot warn about the impact of tariffs on its results, the company lowered full year same-store sales growth estimates to 4% from 5%.

“Home Depot said it now expects 2019 sales to rise about 2.3%, down from a prior forecast of a 3.3% increase,” according to Reuters.

While Dow winners were hard to come by, it was encouraging to see Walt Disney (NYSE:DIS) close modestly higher. The company has recently seen some controversy after a former accountant alleged Disney artificially inflated revenue for years.

“Sandra Kuba, formerly a senior financial analyst in Disney’s revenue-operations department who worked for the company for 18 years, alleges that employees working in the parks-and-resorts business segment systematically overstated revenue by billions of dollars by exploiting weaknesses in the company’s accounting software,” reports Barron’s.

Kuba said she has alerted the Securities and Exchange Commission (SEC) to the matter. This isn’t a comment on the allegations, but shares of Disney have been basically flat over the past week, indicating markets aren’t putting much weight on the accounting accusations.

Apple (NASDAQ:AAPL) gained 0.15% a day after the company said it plans to spend $6 billion on original content for its streaming platform as plans for its Apple TV+ begin to crystalize. Rumors are swirling that Apple could price that offering at $10 a month in the middle of two of Disney’s Disney+ plans.

Downed Dow

Materials name Dow (NYSE:DOW) was by far the worst offender in the Dow Jones Industrial Average, plunging 5.34% on seemingly light news. One reason the stock may have fallen today, and I emphasize “may,” is delayed reaction to an analyst downgrade out last Friday. Delayed because the stock trade higher yesterday, but with Tuesday’s loss, it’s lower by about 13% over the past 90 days.

Bottom Line on Dow Jones Today

Tuesday was another one of those sort of directionless, “let’s wait and see days” where broader takeaways are hard to come by. For traders looking for near-term ideas, headline risk due to regulatory issues for big tech lingers, potentially bringing some short opportunities there, but that’s a cautious bet at best.

Second, there is growing sentiment that the worst of the energy sector’s doldrums have passed and that the sector is primed to bounce back as the third quarter enters its latter stages.

Todd Shriber does not own any of the aforementioned securities.

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