Market Wrap-Up for Oct.18 (BAC, GS, IBM, HOG, STT, SWK, more)

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Was it possible that the markets would actually be surprised of the Euro-TARP plan/bailout actually happening after being rumored numerous times. Well, take a look at today's late-day spike and you see that it was once again being celebrated on reports Germany & France are set to sign off. This is totally what we expected would happen as politicians look to appease the markets in the short term. Remember, the markets are their scorecard and they have their political jobs on the line, so they do what is easiest, rather than finding an actual solution that unfortunately comes with a bit of short-term pain. This may be bullish short-term and there are no complaints about seeing stocks go up, but the refusal of global economies to weather a bit of disciplinary pain may not prove smart in the long run.

The news was certainly good timing for the financials being that both Goldman Sachs ( GS ) and Bank of America ( BAC ) were trading higher following their abysmal results. Elsewhere, earnings reports from State Street ( STT ), Stanley Black & Decker ( SWK ), Genuine Parts ( GPC ), and W.W. Grainger ( GWW ) were met positively by investors. On the flipside, there were some earnings disappointments as well, including IBM Corp ( IBM ), Harley-Davidson ( HOG ), Polaris Industries ( PII ), and UnitedHealth Group ( UNH ).

Social Security Increase Close to Being Announced

According to a new report from the American Institute for Economic Research (AIER), an announcement should be out soon regarding a cost of living increase for retirees. The report estimates an increase in the 3.5%-3.7% range. This move would follow two straight years of no increases whatsoever. Those lack of increases were the only two times in the program's history that retirees didn't see an increase in benefits.

Despite the expected increase, many recipients are on the receiving end of a recent increase in Medicare Part B premiums (which come directly out of one's social security check). That higher charge may actually offset the impending COLA increase. Regardless, any increase is a welcome one (it certainly beats the last couple years of nothing).

We may also hear more about the latest ploy for the government statisticians to combat inflation called the "Chained" Consumer Price Index. This metric may replace the standard model known as the CPI (Consumer Price Index). What does this made-up statistic mean exactly? The easiest way to explain it is to relate the metric to the price of red meat. Traditionally, CPI was calculated by taking the average cost of red meat one year and measuring it against the cost one year later. Simple, right? Effective? Absolutely. Now let's look at the new method. The "Chained" CPI assumes that when the price of red meat goes up, people will simply buy lower-quality cuts of meat (which are, of course, lower-priced). Thus, consumers aren't suffering any ill effects of higher prices at all! Anyone with half a brain can clearly see these new cost measurement metrics are pure nonsense. We are to believe that when the cost of necessities go up, people's costs don't actually go up?

The best thing we can do as individual investors in the mean time is look for opportunities where we receive consistent income sources (dividends) from the companies who can best weather the economic storms ahead. You can count on Dividend.com 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 .

Credit Card Delinquencies Turn Higher

Some potentially troubling news out yesterday as five of the nation's top six credit card issuers reported late payments (measured at 30 days or more) rose in September for the first time since February 2009.

An Easy Plan to Fix Falling Into the Debt Spiral

It's fairly easy to screw up your spending habits and not realize how quickly you are digging a financial hole. One of the ways to avoid this mistake is to create a list of income and expenses. Go through your check book and bank statements to avoid missing routine expenses. Little things do add up, but it's the bigger expenditures that do the most damage (hefty monthly car payments, big shopping sprees that lead to high credit card bills, etc.). Wanting the latest and greatest handbag or tech gadget is a vice that you should only have if you make enough money to afford these luxuries - and only after you are able to put away a healthy amount of money in your investments (high quality dividend-paying stocks) each month. I am not a "don't buy lattes or nice clothes" type of money pundit. If you work hard, make good coin, and invest consistently, why not enjoy yourself? Just don't forget to have an emergency fund (6-12 months of expenses) saved up as well just in case of anything unexpected happening. The goal at the end of the day should be to earn as much money as you can in your field and get a system in place to address the keys I just mentioned.

Income, Income, Income

At Dividend.com, we maintain our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our Best Dividend Stocks List . Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stay tuned and be sure to look for Dividend.com Premium member alerts along the way. Don't count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and achieve your goals yourself!

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: BAC , GPC , GS , GWW , HOG

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