The Dow Can't Escape the Fed
Jun 14th 2013 11:04AM
Updated Jun 14th 2013 12:00PM
Quiet Friday mornings often mean one thing: anxiety about what's coming in the near future. This time around, that anxiety comes from next week's Federal Open Market Committee meeting, at which the Fed will present a long-awaited update on plans to adjust its bond-buying strategy. Investors have pored over economic news recently, speculating about the potential impact that a reduction in bond purchases would have on both bonds and stocks. But this morning's readings on rising producer prices, weak industrial production, and falling consumer sentiment didn't produce any clear indication of what the Fed may do next. As of 10:55 a.m. EDT, the Dow Jones Industrials were down 58 points, with the broader market also moving moderately lower.
Sharper moves among individual stocks are generally the result of company-specific news. Within the Dow, American Express has extended its losses for the week, falling 1.6% after analysts at Barclays downgraded the stock. After soaring nearly 50% between November and early this month, the stock has surpassed target prices at many analyst firms, leading to valuation concerns. At this point, AmEx needs to deliver the growth that recent initiatives such as its Bluebird prepaid debit card have promised to produce. If AmEx can't follow through on these growth prospects, then the stock might already have seen its peaks for the near term.
DuPont has dropped 1.8% as investors continue to punish the stock after yesterday's earnings warning. DuPont gets a substantial amount of business from its agricultural segment, and yesterday the company said that wet weather during the spring planting season would lead to lower-than-expected results for 2013. Despite continued calls for a record corn crop this year, estimates on yields have fallen as chilly and rainy conditions cause planting delays in several Midwestern states. Nevertheless, anything short of a repeat of last year's drought should lead to favorable prospects for DuPont.
Finally, outside the Dow, Groupon has spiked 13% following an upgrade by analyst Deutsche Bank, which believes Groupon's mobile app should help the company see improvement in its coupon use. This stock price jump is surprising, given that most investors had thought daily deals and coupons were largely a fad whose time had already passed, but if Groupon can make its offerings more mobile-friendly, then it might be able to reinvigorate the relatively dormant niche.
Groupon's story is one of the American Dream. The company went from 400 subscribers in 2008 to more than 150 million today. But while this story is definitely one of triumph on a business level, its success hasn't been shared by investors. Company shares have fallen more than 80% over the past year and left investors panicked. Will this company live out its American Dream or leave shareholders empty-handed? In order to answer that question, our analyst has compiled a premium research report with in-depth analysis on whether you should buy or sell Groupon right now, and why. Simply click here now to get started.
The article The Dow Can't Escape the Fed originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express. 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.
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