Market Wrap-Up for July 26 (MMM, UPS, SPG, BRCM, CMI, LMT, more)


Shutterstock photo

Most market watchers were expecting some selling following the President's prime-time gloomy picture of the debt ceiling talks going on in Washington. It would appear the markets are pretty certain a deal will get done in time to keep the lights on (until the next time the debt ceiling debate is back on the agenda, at least). That said, it didn't stop nervous investors from doing some selling toward this afternoon's close.

I am certainly not taking anything for granted, especially when you have politicians involved. However, I have seen politicians act at the market's beckon for years and years. The stock market has become Washington's scorecard, and even though the economy may not be as tied to the market's performance, it is still the barometer of choice.

And speaking of the markets, earnings were the headlines moving individual names once again. Upside highlights included Broadcom ( BRCM ) (which needed a good quarter to break the recent losing streak), Cummins Inc. ( CMI ) (which did not see the same slowdown competitor Caterpillar ( CAT ) talked about during its earnings commentary), Lockheed Martin ( LMT ) (which raised guidance despite threat of military spending slowdown), and Simon Property Group ( SPG ) (which posted yet another solid quarter from this retail space-oriented REIT). SPG is a name that we moved to the sidelines a while back unfortunately and the stock has not come in much. The dividend yield at these levels does not seem great from a risk/reward scenario.

On the downside today, we had U.S. Steel ( X ) (which has been underperforming the last several quarters and this earnings report was not better), United Parcel Service ( UPS ) (surprisingly the market is holding up fairly well considering the weakness in the shares as some market watchers look at this play and FedEx ( FDX ) as a barometer for the overall economy), and 3M ( MMM ) (which was due for a breather as the results have been stellar up to this point). As is the case with SPG, we would like to find a better entry point in 3M shares for investors to consider taking a position.

Quick Note - We removed a dividend stock from our Best Dividend Stocks List this morning. Please be sure to check out the full post detailing this downgrade if you did not read the e-mail alert we sent out earlier today.

A forecast out from the Department of Agriculture yesterday said food price inflation is expected to persist in 2012 with prices expected to increase 2.5% to 3.5%. Heat or drought conditions could cause an even bigger impact as well. The USDA predicts supermarket prices to climb 3% to 4%. We've also heard earnings results from various food makers that have pushed through price increases in recent quarters. Beverage-makers like Coca-Cola ( KO ) have announced price hikes are in the pipeline due to rising raw materials costs. It will be interesting to see how these numbers get factored in the CPI figures that are used to determine Social Security payout levels. It's amazing to see the headline numbers whenever they are released, and the government rationalize the data by saying "if you take this number and that number out, inflation was relatively unchanged." Try that the next time you pay your income taxes and see how the IRS treats that sort of accounting! The best way to keep up with whatever the coming inflation rates will be is to own pieces of companies that have the ability to pass on price increases and reward investors with hefty dividend hikes. Not every company is able to get away with price increases. For some, the cost of doing business will only increase, and with that, will come less rewards for shareholders. Keep up with the best companies to own by having access to our industry-leading "Best Dividend Stocks" list.

Dividend investing allows an investor the opportunity to put compound interest to work for them, and it's never too early or too late to become a dividend investor. The key is once you start, you need to stay consistent and make money available to put to work for you. That's it. Don't count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and create one for yourself. It's great to hear from subscribers that have said they are seeing superb results, and for the first time feel like they have an actual game plan for building and maintaining their wealth. The best thing we can do as individual investors is look for opportunities where we receive great income (dividends) from the companies who can best weather the economic storms ahead. You can count on to be your guide in that arena. As always, you can find all of our current recommendations on our industry-leading Best Dividend Stocks List .

Our main focus is on quality dividend names with attractive yields, and this should be the focus for all those that are hoping to build income for the long-term. We will continue to parse through our data to make sure only the names we like best remain on our recommended list. Remember, if we downgrade stocks from the list, it is not a sell call! Only in very rare instances will we advocate liquidating positions in a formerly recommended name. We just want to have the best names from a risk/reward standpoint on our recommended list for new money at all times. Investors should, however, utilize their own sell strategy in the event a company you own drops 25% from its 52-week high and there are company-specific problems that could cause additional significant underperformance for that particular stock.

Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Created by

This article appears in: Investing , Stocks
More Headlines for: CAT , CMI , FDX , LMT , MMM

More from

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by