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The Daily Dow LEXINGTON, KY. (November 7): Dow Order Flash!! Goodyear Tire raised its quarterly dividend from 25 cents per share to 28 cents, just high enough to nab the tenth and final spot in the High Yield ten. And because of its comparatively low share price, it jumps into the second slot in the Beating the Dow rankings, knocking International Paper completely off the list once more. The rankings could continue to waver back and forth in coming days.
For the first time in three years, consumer debt has declined, according to numbers released today. And together with a well-received 30-year bond auction, that news was enough to overcome an unexpected, albeit slight, drop in weekly unemployment claims. As a result bonds and blue chip stocks rallied again this afternoon, pushing the Dow above 6,200 for the first time.
Every time the Dow hits a new record high, though, the question coming from all sides is whether it's overvalued or not. One way to try to put an objective measure to this question is by looking at consensus earnings estimates for the Dow Industrials. According to First Call, the consensus earnings estimate for the Dow in 1997 is $431.37. With the average just over 6,200, that means the group is trading at just over 14 times next year's earnings. That's in a very typical range for the Dow and doesn't seem at all lofty given the current very good interest rate environment.
But as Fools, we don't spend much time trying to predict the market, especially in the short term. I'll go out on a limb here, though, and predict that by Thanksgiving in the year 2006, the Dow will be above 17,000! Write it down. Call CNBC. Get out your gooroo scorecard. (For those of you who are comfortable with compounded growth, you'll quickly figure out that I'm only expecting about 11% a year growth for the next decade --- hardly a gaudy prediction at all. But it sounds awesome, doesn't it? Especially when you consider that ten years ago, the Dow was at 1900.)
On to stock news:
Texaco isn't the only Dow oil company facing legal troubles concerning its own employees. Chevron today has tentatively agreed to pay more than $8 million to settle a class action discrimination case brought by woman employees who claimed they were treated unfairly in terms of pay, promotions and assignments. The way it stands now, the employees can accept a formula award or opt for arbitration.
The agreement is still subject to approval by San Francisco Superior Court Judge John Munter at a hearing in January. If all 777 women accept the formula award, Chevron will pay at least $7.4 million. The proposal includes an additional $1 million for women who apply for emotional distress awards.
Today's Dow Numbers
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