Hewlett-Packard Company (HPQ), The Coca-Cola Company (KO): These Dow Stocks Are Up in Advance of the Fed’s Statement

Page 1 of 2

The Dow Jones Industrial Average is down slightly as the market eagerly awaits the 2 p.m. EDT release of the Federal Reserve Open Market Committee’s statement, followed by the 2:30 p.m. EDT press conference with Fed Chairman Ben Bernanke. As of 1:15 p.m. EDT the Dow is down 21 points, or 0.13%, to 15,298. The S&P 500 is down 0.14% to 1,649.

Dow Jones Industrial Average 2 Minute (INDEXDJX:^DJI)

There were no U.S. economic releases today, so the market is focused solely on the Fed’s statement. To review, as part of its quantitative-easing program, the Federal Reserve is purchasing $85 billion worth of long-term assets each month — $45 billion in long-term Treasuries and $40 billion in mortgage-backed securities. This is an effort to keep rates down and the economy chugging along.

Investors have begun to worry about when and how the Fed will wind down its quantitative-easing program. Bernanke has made a big effort to communicate the Fed’s thinking so as to not to surprise investors. In its previous statements, the Federal Reserve has said it will keep the purchases going until unemployment falls to 6.5%, inflation rises past the Fed’s target range of 2% to 2.5%, or long-term inflation expectations take off.

Right now we’re not close to any of the Fed’s targets, with unemployment at 7.6%, inflation below 2%, and long-term inflation expectations at 2% (as per the TIPS Spread — the difference between the yields on Treasury Inflation Protection Securities and the nominal U.S. Treasury bond yield). Still, investors are worried. While the Dow has not really reflected it, the bond markets have fallen since May: 10-year Treasury yields have risen from 1.6% to roughly 2.2% now.

10 Year Treasury Rate Chart

10 Year Treasury Rate data by YCharts.

So what will the Fed say, and how will the markets react? I don’t know, and anyone who claims to know is lying. You can make educated guesses, but they’re just that — guesses. While thousands of people closely monitor the Fed and all its members, surprises are bound to happen. However, as the Fed has been clear on its stance so far, your investment strategy should not be predicated upon small changes in the Fed’s statements. If it is, your outlook is too short-term for successful investing.

Despite the uncertainty surrounding the upcoming Fed statement, some Dow stocks are making decent gains. Among today’s leading Dow stocks is Hewlett-Packard Company (NYSE:HPQ), up 0.9%. Earlier today, HP hit a new 52-week high of $25.87. The company has been on a tear this year, up 81% year to date as it continues its slow turnaround under the guidance of CEO Meg Whitman.
Signs of this were seen yesterday when Hewlett-Packard Company (NYSE:HPQ) announced that it would replace the head of its printing and PC business with Dion Weisler, who was hired last year from Lenovo. The PC business has been struggling this year; in the first quarter, worldwide PC sales saw their worst drop in history, down 14%.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!