Stocks Climb as Disney Boosts Dow

20 Jan 2016 | Author: | No comments yet »

Dow ETFs Could Get Some New Additions in 2016.

U.S. stocks climbed on Monday, kicking off the holiday-shortened week as investors scooped up financial and technology stocks that were battered last week. The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA), the tracking exchange traded fund for the Dow Jones Industrial Average, got a little more exciting earlier this year when Apple (NasdaqGS: AAPL), the largest U.S. company by market value, joined the venerable blue-chip index. Stocks have seen wide swings in recent weeks as investors braced for the Fed’s plan to increase rates for the first time in nearly a decade, which was announced last Wednesday. However, some market participants believe the Dow needs even more refreshing and that refreshing should come by way of adding Alphabet (NasdaqGS: GOOG), Google’s parent company, and Amazon (NasdaqGS: AMZN), according to MarketWatch. “Alphabet’s current market capitalization of $522.4 billion would make it the second biggest company in the Dow, behind Apple, while Amazon’s market cap of $314.4 billion would make it the fourth largest.

We are hoping the selling on Thursday and Friday was an aberration and due to massive options expiration,” said Jeffrey Saut, chief investment strategist at Raymond James. Shares initially rallied following the Fed decision, but those gains quickly gave way to a reversal amid renewed worries about slowing growth overseas, trouble in the high-yield bond market and steep losses in commodities prices. Meanwhile, Spain’s IBEX was deep in the red, down 2.4% after the ruling Popular Party failed to win sufficient votes to form a government on its own, a rebuke by voters to unpopular austerity measures.

NRBAY 1.70 % “The results will hit Spanish assets in the near term, and cloud the outlook for the Spanish economy longer out.” In commodities, Brent crude oil prices fell again Monday to levels not seen since 2004 on further signs of an expanding global supply surplus. Because of how the Dow and DIA weigh their components, Goldman Sachs (NYSE: GS) is the largest holding. [Apple is Coming to the Dow ETF] With price tags over $739 and $664 respectively, Alphabet and Amazon would likely need to undergo significant splits before the Dow can consider adding these stocks. And with the low volume will come a pickup in volatility, so “Santa maybe just around the corner, but don’t rule out the commodity rout stealing the limelight yet again.” U.S. markets will close early on Christmas Eve and not reopen until Monday, in what will be a full day of trading. Fed Focus: On Friday, Richmond Federal Reserve Bank President Jeffrey Lacker predicted that the U.S. central bank will increase interest rates up to four times over the next 12 months. A bare minimum split would be 7-for-1 for each stock, which is exactly what Apple did months before S&P Dow Jones said the stock would be added to the blue-chip index.

SPAIN ELECTION One market that wasn’t faring well Monday was Spain’s IBEX, which was down 2.8 percent after Sunday’s election saw the far-left Podemos and the business-friendly Ciudadanos parties win a number of seats. However, some foresee challenges to that prediction, including low oil prices, concerns about economic growth for major trade partners, and a recent downturn in domestic manufacturing.

The rest of the week will be busy, and Wednesday marks the busiest day for data releases, with durable goods orders, and consumer spending and sentiment all coming out at once. THE CONTEXT Although Spain’s economy has been growing strongly over the last year, its public finances remain strained amid unemployment levels of around 20 percent. Though Spain did not need a financial bailout like others in the 19-country eurozone, such as Greece and Portugal, the Popular Party government has been pursuing relatively tough budgetary policies and wide-ranging economic reforms.

Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. The holiday-shortened last two weeks of the year typically are positive for the market, since investors close out positions and the light volume tends to distort any market moves. ANALYST’S TAKE “We could now be facing an era of political paralysis and instability in Spain,” said Craig Erlam, a senior market analyst at OANDA. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Stocks to Watch No. 1, ISIS: Drug manufacturer Isis Pharmaceuticals Inc. (Nasdaq: ISIS) announced that it will change its name to “Ionis Pharmaceuticals Inc.” The decision comes as the firm attempts to disassociate its name from the terrorist organization ISIS. Tim Cook told journalist Charlie Rose that the technology company manufactures its products in China because Chinese workers have more skills than American and German workers. In addition, Cook said the company is keeping money abroad because of the antiquated domestic tax code, which was developed – in his terms – for the industrial age, not the digital age.

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