The Daily Dow
Thursday, May 2, 1996
by Robert Sheard

LEXINGTON, Ky. (May 2): Let's see, the market dropped nearly 100 points at one stage today, before closing down 76 points. That means it must be monthly employment report time again.

This makes three months in a row when the market took a big one-day tumble on economic news surrounding the monthly employment report. Today's drop comes a day early, but the strong Gross Domestic Product figures released today set the stage for the monthly tumble.

The worries are that a stronger economy brings higher inflation and higher interest rates (long-bond rates climbed back over 7% today, the highest, I believe, since last summer). The other half of that equation, of course, is that a stronger economy can also boost company profits. The fact that the first quarter's strength helped companies out-do Street estimates in the first quarter seems to be getting overlooked every time we have these short-term tumbles.

What's a Fool to do? Nothing, of course. Fools don't worry about every swing in the larger economy (assuming those can even accurately be measured - a doubtful proposition at best). A Fool's goal is to find the best stocks to invest in regardless of the economy or "the market." That's enough of a job for anyone, let alone trying to predict the Fed's moves or the price of corn futures if it doesn't rain next week in Nebraska. Stick to what you know, Fool -- fundamental analysis of a company from the bottom up.

In Fool Four news today, 3M posted its first-quarter earnings right in line with Street estimates of $0.87 a share. Sales were up 3.2% from last year and operating income was up about 2%. 3M also earned another 6 cents per share in operating income from discontinued units, so those figures are not included in the $0.87 total.

L.D. DeSimone, chairman and chief executive officer, said, "Our people did a good job in a challenging environment. We achieved record sales and profits despite slow growth of major world economies, strengthening of the U.S. dollar, and negative effects from raw material costs." The company sees continued growth in the international markets as well as here at home as the economy strengthens.

In other Fool Four news, Caltex, a joint venture between Chevron and Texaco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TX)") else Response.Write("(NYSE:TX)") end if %>, launched its new 130,000 barrels per day Star refinery in Thailand. The first cargo of refined oil products is scheduled to be lifted on May 5. Caltex owns 64% of the refinery, with the remainder owned by the Petroleum Authority of Thailand.

Stay calm, Fools. Tomorrow could be another bumpy day if the April employment data spooks the bond market further. Keep your eyes set on the distant horizon.

Transmitted: 5/2/96 5:42 PM

      THE FOOLISH FOUR MODEL (5/2/96)  
           Day    Week   Quarter  Year   History
Fool-4   -1.16%  -0.43%   1.32%   9.29%   9.29%
DJIA     -1.38%  -1.25%  -1.59%   7.45%   7.45%
S&P 500  -1.71%  -1.54%  -0.33%   4.46%   4.46%
NASDAQ   -1.78%  -0.73%   6.98%  11.99%  11.99%
Rec'd    #   Security  In At   Now   Change
1/2/96  148  E. Kodak  67.00  76.75  14.55%
1/2/96  142  DuPont    69.88  78.88  12.88%
1/2/96  380  Chevron   52.38  57.00   8.83%
1/2/96  149  3M        66.38  65.38  -1.51%
Rec'd    #   Security       Cost       Value     Change
1/2/96  148  E. Kodak    $9,916.00  $11,359.00  $1,443.00      
1/2/96  142  DuPont      $9,922.25  $11,200.25  $1,278.00      
1/2/96  380  Chevron    $19,902.50  $21,660.00  $1,757.50      
1/2/96  149  3M          $9,889.88   $9,740.88   $(149.00)    
      CASH        $682.44       
      TOTAL    $54,642.57         
Transmitted: 5/2/96 5:42 PM 

      
      

      
      

        

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