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The Daily Dow LEXINGTON, Ky. (Apr. 17): Earnings season continues to drive the market in schizophrenic ways. Today much of the market's Sybil imitation came about because of IBM. After reporting earnings this morning that appeared to beat Street estimates, IBM rose a few bucks a share, lifting the whole Dow.
But then people started to worry about comments made by CEO Gerstner about potential currency problems in the second quarter and disappointing margins and it was time for a Batman turn. IBM went from $4 up to nearly $10 down by the end of the day, responsible for nearly half of the Dow Jones Industrial Average's loss.
This shows the foibles of a price-weighted index a bit. As the high-priced issues go, so goes the Dow, regardless of whether the majority of stocks are moving in the same direction. Then, when traders see the index moving, they start moving the rest of the stocks in the index, too. So, by the end of the day, it looks like all of the stocks moved together for the same reason. Can you spell "herd"?
Ah well ... gotta love that long-term investment horizon that lets you off the hook for today's returns, or tomorrow's. If your long-term returns continue to beat the market (and thus, the vast majority of professionals), let the Wise corner the market on the Pepcid stand.
In Foolish Four news today, Chevron announced that it's entertaining an offer for its 24% equity share in the British North Sea Ninian oil field. The company won't give details on the offer, but a report in the Scottish press named Dallas-based Oryx Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:ORX)") else Response.Write("(NYSE:ORX)") end if %> as the bidding company. Chevron is in the middle of a cost-cutting program on the mature Ninian field and may well see this is the ultimate snip.
Minnesota Mining announced today that Graseby plc has signed a letter of intent to purchase 3M's worldwide Infusion Therapy business. Graseby and 3M are also negotiating a transitional supply agreement for equipment and a distribution agreement for 3M to provide market coverage in selected regions outside the United States.
In the ever-increasing tension between China and its neighbors, China has declared the recent agreement to explore for oil in the South China Sea between Vietnam and Conoco (a unit of DuPont) "illegal and invalid." China's official news agency, Xinhua, quoted foreign ministry spokesman Shen Guofang's claim that Vietnam's approval of Conoco's oil exploration "infringes upon China's sovereignty over its territory and maritime rights and interests." The two blocks in question are near the disputed Spratly Islands, claimed by virtually everyone in the region - China, Vietnam, Malaysia, the Philippines, Taiwan, and Brunei.
Transmitted: 4/17/96 6:33 PM
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THE FOOLISH FOUR (4/17/96) |
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