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Dow Jones Today: Boring Post-Fed Action

Todd Shriber

Following yesterday’s interest rate cut by the Federal Reserve, which may have left market participants with more questions than answers, stocks meandered for most of Thursday with the major U.S. indexes not doing much of anything in either direction.

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Still, the S&P 500 is within 1% of its record highs, so there could be more upside to be had over the near-term, particularly as we get into October and get more, hopefully positive, news on the trade talks with China.

When the closing bell sounded today, the Nasdaq Composite was higher by 0.07% while the S&P 500 was unchanged. The Dow Jones Industrial Average slipped by just 0.19%. In late trading, half of the Dow’s member firms were trading higher.

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A DJIA Stock Rewarding Investors

Many investors love dividends and plenty love share buybacks. Put those two themes together and there’s usually a positive reaction, hence why Microsoft (NASDAQ:MSFT) was the Dow’s leading performer today, gaining 1.84%.

Microsoft, which has been become a dividend growth story in recent years, boosted its payout by 11% while noting it will repurchase another $40 billion worth of its stock. The company’s new dividend yield is just 1.33% and Microsoft holds plenty of cash on hand so it can raise dividends and buyback shares as it sees fit, and do so over the long-term.

Boeing’s Back

Boeing (NYSE:BA) makes an almost daily appearance on the Dow Jones Today roundup. The shares were lower by about half a percent as traders discussed the fate of the stocks come October, a month that looks like it’s going to be a vital one for Boeing investors.

“CEO Dennis Muilenburg is headed to Washington. He received an invitation to testify before the House Committee on Transportation and Infrastructure on Oct. 30,” reports Barron’s. “This is the same committee that grilled FAA officials about its approval process for new planes as well as its decision to ground Boeing’s 737 MAX jet back in May.”

No promises, but there’s a chance Muilenburg’s October congressional testimony will provide some clues about Boeing’s ability to get the 737 MAX back in the skies by the end of this year.

Bad Entertainment

For much of this year, Walt Disney (NYSE:DIS) has provided investors with some good theater, but that wasn’t the case Thursday as shares of Disney slid 2.57%, making the stock the worst performer in the Dow. There’s still a lot to like with Disney stock, but there are some challenges from the film business, which has been a key driver of the stock’s performance this year.

Imperial Capital analyst David Miller said in research out today that there are some issues surrounding Disney’s ability to work through the backlog of films it acquired via its purchase of 21st Century Fox. That is weighing on box office performance for some of those movies. The analyst slightly lowered his Disney price target to $139 from $140.

Dow Bank News

It closed slightly lower today, but Dow component JPMorgan Chase (NYSE:JPM) continues to look like one of the stronger banking names and could be on the cusp of a breakout.

“They are the gold standard of the banking industry. They have a strong leadership team, and they’re benefiting from the tax overhaul. But nobody’s even recognizing that,” said Michael Bapis, managing director of Vios Advisors at Rockefeller Capital, in an interview with CNBC.

Bottom Line: Sorting Things Out

For investors that like interest rate cuts, more may be coming even though yesterday’s Fed minutes indicated the Fed is divided on that issue.

“A big question for us was whether Jerome Powell still considered rate cuts to be ‘midcycle’ adjustments,” said Morningstar in a new note. “Though Powell avoided directly answering the question, we got the sense the cut was more of the midcycle variety, rather than the ‘beginning of a lengthy cutting cycle.’ We still view at least one or two more cuts over the next year as the most likely outcome.”

Todd Shriber does not own any of the aforementioned securities.

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