Market Wrap-Up for July 23 (HAL, HAS, MCD, ETN, COH, MAR, more)

Friday’s fears stretched into the start of trading this week for the markets, and despite several small merger deals being announced, investor sentiment remained quite bearish for much of the day, despite ending off the lows of the session. The European and Asian markets plummeted following further debt concerns early this morning, so it comes as no surprise that the U.S. markets are following suit.

We’ll start off by looking at the few positives from the markets today, and they were the positive reactions to earnings results fro Halliburton (HAL), Hasbro (HAS), and Eaton Corp (ETN). McDonald’s (MCD) didn’t share in the earnings parade however as the company missed their numbers. Strong dollar concerns also weighed on the fast food giant. Finally, Wall Street analyst downgrades pushed share prices of Marriott International (MAR), Manpower (MAN), and Coach (COH) lower.

Fundamentals Matter — Most of the Time

As we sit here watching the markets getting hit today, the cautious tone we’ve been picking up on from corporate America the last couple of quarters is starting to be felt. If you’ve noticed, we have been quite stringent with the number of stocks we are currently recommending on our Best Dividend Stocks List.

It’s difficult to be massively bullish after watching see the markets rally on low volume, or when just one piece of economic data happens to be much better than analysts had been forecasting, only to see the following month’s data reverse course back to the negative side. Then the minute you think the market is set to wash out, and perhaps put in a sell-off that can truly sort things out, you get breaking news of bailout talks or something else of the sort. We’re certainly not rooting for a stock market crash, but sometimes bad news really is bad news and thus needs to be reflected in actual stock prices. I personally have never seen a market like this before, where specific companies’ earnings results and commentary don’t correlate with other names int he same industry. Such is the daily battle we fight in our painstaking daily research.

The business media loves the dramatic side of covering the day-to-day movements, but they also know it is much better for business when the focus is painted more positively than negatively. It all comes down to real dollars and what is actually happening in the real-world economy. Real estate prices have held up well in select spots, but for the most part prices remain capped. Comparable sales data continues to hurt sellers and buyers who are hoping to take advantage of low interest rates. With no idea of how much real inventory exists in the markets (many point to a “shadow inventory” of millions of foreclosures that banks have held back on adding to an already crowded real estate market), any talk of great investment returns in real estate is essentially confined to the few geographic areas which have seen job growth.

Of course, our focus is the stock markets, but you can not ignore the potential overhang of how economic data eventually creeps into corporate America’s profit picture. Being super-bearish is not a great strategy either, as we have seen plenty of Federal Reserve bulletins on doing whatever it takes to lift economic sentiment. Not to mention short sale bans, which Spain just announced this morning.

Short-term, these governmental measures can help keep the proverbial balls floating in the air. But fundamentally, the long-term fix is still not clear. Creating jobs is of utmost importance, and few have confidence that world governments can put the right programs in place to make that happen. It really comes down to corporate America and small businesses to get that employment ball rolling.

In the meantime, we perform our daily routines in evaluating the latest earnings reports. More importantly, we’re working on crafting the true picture of what the next 3, 6, or 12 months will look like. Will we ever get true “coast is clear” data points in our investing lifetimes? Probably not, but that doesn’t mean opportunities aren’t around the corner. That’s why it’s important to stay in the game, consistently putting your money work for you. Eventually, smart money will be in the perfect place to take advantage of some great investment ideas.

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I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

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.

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