September 13, 2011 at 16:10 PM EDT
Market Wrap-Up for Sept.13 (BBY, BAC, HPQ, CMI, AET, GWW, more)

The market’s desire to rally early in the trading week was once again on display as the indices put together two back-to-back winning sessions. The pattern is getting almost too easy to read. We have conflicting headlines out of Europe today as the media grabs every sound byte it can find.

As for the markets, shares of Cummins Inc. (CMI) and Aetna (AET) received investor attention following positive comments from both companies’ managements. Shares of W.W. Grainger (GWW) was also higher following an analyst upgrade. The airline stocks also posted some gains today. This past weekend’s Barron’s magazine contained a positive piece on the airline industry, which could be helping those shares. Unfortunately for investors in airline stocks, the windows for opportunities in the sector tend to be just for nimble traders. Pull up any long-term charts of the airline companies and you will probably not like what you see.

Lastly, shares of Best Buy (BBY) dipped 6% as investors ran for the exits following the electronics retail giant’s subpar earnings results. We were scratching our head as to why the shares in the pre-market were advancing higher, but that didn’t last long once the opening bell rang.

Avoiding Market Shock

Did anyone notice Bank of America (BAC) shares didn’t really react to news of 30,000 layoffs hitting the wires yesterday? This lack of action is probably due to the fact that the layoffs were already anticipated for quite some time. Analysts have long since predicted those job cuts, hence the market yawned at the company’s announcement. Newer investors may not understand what moves markets early on, but if you have been around the markets long enough (like myself), you eventually learn how the game is played.

As another example, right now there is plenty of chatter about a Greek default. If and when this happens, it could still hurt the averages as the width of the financial ramifications is still unclear, but because the idea of a default is already out there, the news will not be a shock to the markets. Avoiding a market shock tends to be in everyone’s interest, whether it’s corporate management, investors, money managers, etc. Wall Street never handles shock well, and share prices tend to reflect any sudden news very badly. So the next time you see a headline and wonder why the markets didn’t really react, it is likely because the news was pretty much expected and had already been priced into the markets.

Getting back Bank of America’s (BAC) struggles and its new initiative “Project New BAC,” there are still plenty of uncertainties that remain. Investors should remain wary of bottom-fishing just because a pundit declares uncertainty equates to share price opportunity. That sort of contrarian thinking can do a lot of damage to one’s long-term plan on building wealth through investing in consistently profitable companies.

The Jobs Dilemma

While it is true that corporate cash piles are as high as they ever have been, not every company is sitting on a load of cash. In fact, there are plenty of industries that continue to streamline operations in order to save money, effectively doing more with less. Meanwhile, there are others that have resigned themselves to survival status. Anyone doing business development these days will have stories of initial conversations that led nowhere, as much economic uncertainty remains and managements tend to get strategy paralysis.

When you see companies like Hewlett-Packard (HPQ) trading at mid-1990 levels, you have to wonder how comfortable management got throughout the years of big bonuses and ridiculously-high salaries that the company’s board just accepted without blinking an eye. Once innovation or the will to grow a business stops, the expiration clock begins to count down. This concept applies to any business, so if you are running your own business, keep that fact in mind.

Washington may be reacting to today’s current job/unemployment data, but these numbers are unlikely to slow down. The backlog of college students graduating without finding adequate employment is only increasing. Job initiatives need to be coordinated with school curriculum. Colleges and universities must begin to justify their exorbitant tuition costs with real-world skills. For example, what’s the point of allowing students to bury themselves in debt going to law school if the demand for new lawyers is far below those pursuing that particular career path? I’m not saying to shut the door on one’s aspiration, but if the current odds of finding work in a particular industry are excruciatingly hard, wouldn’t it make sense to consider other paths? As my kids approach their own career decisions, I hope to learn everything possible to help them pinpoint where their career path may be best suited, as well as the best ROI for their tuition costs.

At Dividend.com, we are maintaining 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!

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