Market Wrap-Up for Oct.12 (PEP, AA, FCX, BHP, WFC, JPM, more)

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Stocks were once again spiking today, as we prepare to head into fourth quarter earning season, which begins in earnest next week. Looking at our past data, we saw a similar event happen going into third quarter earnings as well. The markets moved sideways during the first two heaviest weeks that quarter, followed by a move lower.

Looking at today's spike (which likely caught some short-sellers flat-footed), we once again noticed the recently beaten-up sectors catching some higher bids. Commodity plays like Freeport McMoran ( FCX ) and BHP Billiton ( BHP ) were up nicely early on, but did close off the day's highs as the market pulled back by the close. Over in the financial sector, Wells Fargo ( WFC ) and J.P. Morgan ( JPM ) were pacing the gains. On the earnings side, we had mixed results with PepsiCo ( PEP ) gaining early and finishing higher, while shares of Alcoa ( AA ) finished in the red following their disappointing earnings results. Speaking of earnings, PVH Corp ( PVH ) and Johnson Controls ( JCI ) both released positive commentary about their upcoming earnings releases, and both pushed higher for much of the day.

The Dow at one point today was up 1,100 points over the last 5 trading sessions, starting from last Tuesday's afternoon lows. We think it would be wise for investors to use the recent spike as an opportunity to trim some of the under-performing stocks that may be causing damage to one's overall portfolio performance.

Enhancing Shareholder Value Through Job Cuts

Executive search firm Heidrick & Struggles ( HSII ) announced a restructuring initiative this morning. Part of management's plan to strengthen the company and better position it for long-term success includes a 10% reduction in its global work force. I recently mentioned that corporate America will continue to get leaner and attempt to squeeze more profits out of declining sales. This news follows my post yesterday on how to develop a contingency plan, should layoff news come unexpectedly in your own work life. Without question, the world is in a readjustment period when it comes to higher unemployment globally. In my opinion, you will continue to see an intensified focus on job creation even beyond next year's major elections.

Learn to Engage or You Will Starve

A few days ago, I stopped by my local eye doctor's office to pick up some new eyeglass cleaner and while I was there, I struck up a conversation with two opticians. One woman has been in the eyecare business for 31 years and was buzzing all around talking about the business, while the newer young lady was there, but not nearly as engaged in the conversation. I'm guessing when it comes to compensation, the opticians are part salary, part commission in that particular office.

Here's the thing, and I see this a lot with younger people, their ability to carry conversation is often very lacking. Now we have all been "green" in our fields at some point in our lives. However, when sales are part of how you will be making a living, you'd better learn how to engage as soon as possible.

We often hear about employers turning to younger workers to save on salaries, but when you have an experience as I had, you can certainly see why it is not too smart to dismiss the value of experience in the work place. I worry about how today's new college graduates will fare, given a certain lack of business conversation skills. We know many can communicate well within their own inner circle (even though texting rather than talking has become the dominant way of communication these days).

I remember when I was growing up, I'd help sweep out my dad's barber shop. Customers would often tell me how long they'd been coming to that same shop, and how they remembered how excited my dad was when I was born. You see, conversation is a natural part of many service businesses, not just sales. To this day, you still need conversation skills to go along with your hairstyling talents. Sometimes the foundation of success can begin with as little as a smile and a good personality!

Tail Wagging the Dog

We are seeing more and more attention paid to the leveraged ETF (Exchange Traded Fund) space as market volatility continues to reign. Originally the fuss began when the markets were falling lower. Pundits started pointing their fingers to trading in the leveraged ETFs as a cause of the vicious drops in the market. Just recently, we've begun to see arguments that markets are now being manipulated higher, and with this, market-watchers worry the market action will keep retail investors from having much confidence in stock prices.

I have been vocal about the effects of leveraged ETFs, but the resolution to this potential problem will be is still yet to be determined. I can tell you this, traders who are trying to make a living are frustrated with the vicious market moves and many have described what they feel is the worst trading environment in years (bulls and bears both struggling to make money consistently). While this certainly can affect dividend stocks that we cover, if we feel stocks are taken down with little fundamental concerns to match the drop, we will not hesitate to put those names on our recommended list. In the end, it will be the fundamentals that will carry a company's valuation higher or lower. Yes, leveraged ETFs matter, but for what our focus is on finding quality income-producing dividend stocks, we will not lose sight of what the overall focus should always be - a company's fundamentals.

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Thanks for reading everybody. I'll see you tomorrow!

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 The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: AA , BHP , FCX , HSII , PEP

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