It took a day, but stocks finally reacted to react to yesterday’s dovish musings from the Federal Reserve. After barely creeping higher on Wednesday following the conclusion of the Fed’s two-day meeting, gains grew more substantial Thursday. All three of the major U.S. equity benchmarks flirting with gains of 1%.
Geopolitical headlines, not of the tariff variety, boosted stocks as well. Oil rallied after Iran shot down a U.S. Navy drone. President Donald Trump took to Twitter calling Iran’s move “a very big mistake.”
“Iran produces more than 2.3 million barrels of oil a day, about 2% of the world total and 8% of daily oil output from OPEC, and its economy is highly reliant on oil and gas exports,” according to Barron’s.
That is nowhere near the more than 12 million barrels per day pumped here in the U.S., but news of Iran’s hostility was enough to lift Dow components Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), the two largest U.S. oil companies.
When the closing bell sounded, the S&P 500 and Nasdaq Composite were higher by 0.95% and 0.8% while the Dow Jones Industrial Average was up 0.94%. Exxon and Chevron were two of 26 Dow stocks in the green today and two of the top 10 performers in the blue-chip index.
When geopolitical headlines involve military hostilities and the potential for escalation of those tensions, aerospace and defense stocks often respond to the upside. That was the case today as United Technologies Inc. (NYSE:UTX) and Boeing (NYSE:BA) were two of the Dow’s best performers.
In addition to the aforementioned Iran controversy, United Technologies got a lift today from comments by industry executives regarding the company’s heavily scrutinized $121 billion plan to acquire rival Raytheon (NYSE:RTN).
“Most dismissed any suggestion that the merger could trigger similar moves among players in the more fragmented European industry, noting that national loyalties and different market conditions will limit cross-border transactions on such a scale,” according to Reuters.
In what was something of an “industrial renaissance” today, each of the Dow’s members hailing from that sector finished higher. The index’s four industrial names were among its top six winners on a percentage basis.
Each of the Dow’s financial services components rose today as well. American Experss (NYSE:AXP), a name that has been highlighted here in recent days, posted a modest gain. And Visa (NYSE:V) has been one of the more impressive Dow stocks for awhile now. The credit card giant added 1.83% today on its way to a record high. That extends Visa’s month-to-date gain to over 4% and its year-to-date gain to nearly 30%.
Sticking with tech for a minute, each of the Dow’s constituents from that sector closed in the green today, led by Cisco (NASDAQ:CSCO), which added 2.3%.
Bottom Line on the Dow Jones Today
The Iran situation is worth monitoring over the next few days, particularly for investors owning any of the aforementioned aerospace or oil stocks. However, as that situation blows over, market participants will refocus their attention to monetary policy and if/when the Fed will cut interest rates.
On that note, CNBC had an interesting piece out today highlighting the bullishness news of three Dow components against the backdrop of declining interest rates. Those names are Home Depot (NYSE:HD), Verizon (NYSE:VZ) and Walt Disney (NYSE:DIS). Of those three, only Verizon closed lower today.
As of this writing, Todd Shriber did not own any of the aforementioned securities.