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    These 2 Dow Leaders Are Hurting the Stock Market

    Summer is often a positive time for the stock market, but that’s not proving to be the case this week. Wednesday morning brought continued volatility on Wall Street, as investors are trying to work through whether recent inflationary indications will reverse themselves just as quickly as they emerged. As of 11:30 a.m. EDT today, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 67 points to 34,644. The S&P 500 (SNPINDEX:^GSPC) had moved higher by 5 points to 4,348, but the Nasdaq Composite (NASDAQINDEX:^IXIC) had fallen 46 points to 14,617.

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    Many investors look to the Dow as an indicator of the health of the broader stock market. In that context, declines from Boeing (NYSE:BA) and Goldman Sachs (NYSE:GS) stood out in holding back the average from bigger gains. Below, we’ll look more closely at what’s hurting these companies and whether this could be the beginning of a larger pullback.Losing its lift

    Shares of Boeing were down nearly 2% on Wednesday morning. The aerospace giant continues to deal with uncertainty related to the pace of the reopening of the global economy and progress against the pandemic around the world.

    Boeing 737 aircraft in flight as seen from a nearby plane.

    A Boeing 737. Image source: Boeing.

    Major international airlines were all broadly lower on Wednesday, with Delta Air Lines (NYSE:DAL), American Airlines Group (NASDAQ:AAL), and United Airlines Holdings (NASDAQ:UAL) off between 2% and 3% on the day. Domestically, air travel has rebounded nicely, with traffic through TSA checkpoints topping their 2019 level earlier this month for the first time since the pandemic began.

    Yet airlines are still waiting for international routes to return to full capacity, and that could potentially weigh on order activity for Boeing. Industry leaders foresee that travel between the U.S. and the U.K. could reopen in just weeks, and there’s also optimism that Canada could reopen its border to vaccinated U.S. residents sooner rather than later.

    A lot depends on the speed of vaccine rollouts both in the U.S. and overseas, as well as the potential impact of the Delta variant and other COVID-19 variants. If existing vaccines prove ineffective against future variants, then air travel could be right back at square one — and that could prove extremely problematic for Boeing and its expectations of a return to normal in the near future.Banking on higher rates?

    Elsewhere, shares of Goldman Sachs were down almost 1%. That’s not a lot, but given Goldman’s high share price and the fact that the Dow is a price-weighted index, the investment bank’s decline had a relatively significant downward influence on the Dow overall.

    Until last month, Goldman had had an extraordinary year in 2021. Prospects for higher interest rates given the recovering economy were a big positive for the banking industry, especially with the prospects for boosting net interest income by passing through interest rate increases to loan and credit card customers. Goldman isn’t the biggest bank on the retail side, but it has worked to make a bigger impression in the space through its Marcus unit.

    It’s true that Goldman can rely on its leadership position in mergers and acquisitions, initial public offerings, and trading for its own account to generate reliable cash flow and profits. But shareholders are increasingly looking at the retail side of Goldman’s business for future growth prospects. Accordingly, when Treasury rates fall to their lowest levels in six months, it weighs on the stock’s potential.

    Goldman will be a long-term winner, but it’s vulnerable to short-term macroeconomic impacts. As long as interest rates go lower, Goldman is likely to have a tough time returning to its all-time highs.

    This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

    5 things to know before the stock market opens Wednesday

    Here are the most important news, trends and analysis that investors need to start their trading day:Stocks look steady as Wall Street tries to restart rallyBond yields dip ahead of afternoon release of Fed minutesMortgage demand sinks to lowest level since beginning of pandemicDidi removed from China’s WeChat, Alipay apps for new usersSatellite imagery company Planet Labs is going public1. Stocks look steady as Wall Street tries to restart rally

    a man talking on a cell phone screen with text: The New York Stock Exchange welcomes executives and guests of Clear Secure, Inc. (NYSE: YOU), on June 30, 2021, in celebration of its Initial Public Offering.

    © Provided by CNBC The New York Stock Exchange welcomes executives and guests of Clear Secure, Inc. (NYSE: YOU), on June 30, 2021, in celebration of its Initial Public Offering.

    U.S. stock futures were relatively flat Wednesday, one day after the Nasdaq logged another record high close while the S&P 500 broke a seven-session winning streak. The Dow Jones Industrial Average — which like the S&P 500, closed at a record Friday — started the holiday-shortened week by snapping a four-session winning streak. Concern that the best of the economic recovery from the Covid pandemic could be in the rearview mirror hurt sentiment. U.S. oil prices rose Wednesday after Tuesday’s surge to six-year highs turned into the worst session since May. OPEC and its oil-producing allies threw uncertainty into the market when they indefinitely postponed talks on output policy.2. Bond yields dip ahead of afternoon release of Fed minutes

    a man wearing a suit and tie: Federal Reserve Chairman Jerome Powell during a House Financial Services Committee hearing on Dec. 2, 2020 in Washington.

    © Provided by CNBC Federal Reserve Chairman Jerome Powell during a House Financial Services Committee hearing on Dec. 2, 2020 in Washington.

    The 10-year Treasury yield fell early Wednesday, trading around 1.34%, ahead of the afternoon release of the minutes from the June meeting of the Federal Reserve’s policymaking committee. Traders will be looking for more clues into why central bankers moved up their timetable on interest rate hikes, with most of the 18 members of the panel forecasting two in 2023. In fact, seven members see the Fed possibly increasing rates as early as next year. It’s going to be a busy summer for Fed watchers. Chairman Jerome Powell is set to testify next week on Capitol Hill, about two weeks before the Fed’s July meeting. The Jackson Hole Economic Policy Symposium, sponsored by the Kansas City Fed, is set for Aug. 26-28 in Wyoming.

    Video: U.S. stock futures point to a higher open after Tuesday’s mixed close (CNBC)

    U.S. stock futures point to a higher open after Tuesday’s mixed close

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    UP NEXT3. Mortgage demand sinks to lowest level since beginning of pandemic

    a sign in front of a building: A home for sale on Wednesday, June 9, 2021 in Susanville, CA.

    © Provided by CNBC A home for sale on Wednesday, June 9, 2021 in Susanville, CA.

    Mortgage demand declined for the second straight week as low inventory and high home prices continued to weigh on the hot housing market. Mortgage applications decreased 1.8% last week, according to the Mortgage Bankers Association’s seasonally adjusted index, falling to the lowest level since the beginning of 2020, before the coronavirus pandemic started to take a toll on the economy. Both refinance and purchase demand took a hit, even as mortgage rates slipped. Home purchase applications dropped 1% for the week and 14% from a year ago. Refis fell 2% for the week and 8% from a year ago.4. Didi removed from China’s WeChat, Alipay apps for new users

    a close up of a sign

    © Provided by CNBC

    Shares of Chinese ride-hailing giant Didi dropped another 4% in Wednesday’s premarket as the company’s main app was removed from Tencent’s WeChat messaging service and Ant Group’s Alipay for new users. Didi plunged 19.6% to $12.49 per share Tuesday, after China announced a cybersecurity review of the company. Didi went public on the New York Stock Exchange exactly one week ago at an initial offering price of $14 per share. The crackdown on Didi continues Beijing’s aggressive action against China’s tech firms, from the canceling of the $34.5 billion Ant Group IPO last year to the $2.8 billion antitrust fine for Alibaba.5. Satellite imagery company Planet Labs is going public

    Craig Branham standing in front of a flat screen television: Cofounder and CEO Will Marshall

    © Provided by CNBC Cofounder and CEO Will Marshall

    Satellite imagery and data specialist Planet Labs is preparing to go public, merging with a SPAC in a deal with backing from Alphabet’s Google, BlackRock and Salesforce co-founder Marc Benioff. Planet Labs is merging with special purpose acquisition company dMY Technology Group IV, which trades on the NYSE under ticker DMYQ. “We’re a mature business and have a massive new and unique data set of our 190 satellites, the largest Earth imaging fleet ever, and more than 10 times anyone else,” Planet Labs co-founder and CEO Will Marshall told CNBC. Shares of DMYQ rose almost 2% in premarket trading.

    — Follow all the market action like a pro on CNBC Pro. Get the latest on the pandemic with CNBC’s coronavirus coverage.

    How to intelligently invest in shares when the stock market is soaring

    If you can ably do stock market analysis, direct investments in the stock market can be highly rewarding in the long term provided you understand the risks too.

    © Provided by The Financial Express If you can ably do stock market analysis, direct investments in the stock market can be highly rewarding in the long term provided you understand the risks too.

    Many investors with a high-risk appetite love investing in direct equities. The Indian stock market is currently trading close to its all-time highs, but some investors are not sure whether they should stay invested or exit from their current investments in shares. They fear that if the market falls from this level, they may end up losing their wealth. At the same time, they don’t want to give up on possible gains if the market continues to make new highs in the coming days.

    So, what should they do? What should be their investment strategy in shares when the stock market is at an all-time high? I’ve discussed a few useful pointers in this regard.Consider investing in dividend-paying stocks

    Stocks can give you a return on investment in two ways: through capital gains, or dividend income through which companies share their profit with shareholders. If the company you invest is cash-rich, has been generating income regularly, and is low on debt, it is likely to pay dividends. Usually, companies that provide high dividend yields consistently are less prone to market volatility. So, even though the stock market is trading at an all-time high level, you could consider picking such stocks that have strong fundamentals, excellent dividend pay-out history, and a potential to offer dividends consistently in the future.

    However, before investing in shares of dividend-paying companies, it’s crucial to understand the tax implications too. Dividend income is taxable at the hand of investors. So, if you receive dividend income, you have to pay tax on such income as per your applicable tax slab rate.Avoid speculation

    Moving in and out of stock investments in a short timeframe to make more money is usually considered speculation. The main difference between investment and speculation is that the former focuses on analysis and risk management towards earning the anticipated rate of return, but the latter doesn’t rely on research-it instead depends on ‘chances’ to earn an income. When the market peaks, you should be ready with all kinds of strategies to mitigate the associated risks. Investing after thorough research can help you avoid unnecessary risks and lower the chances of losses.Follow strict stop-loss on short-term investments

    As the name suggests, ‘stop-loss’ is the threshold level pre-set by the investor beyond which the investment position is exited to reduce further losses. For example, suppose you have invested in 100 shares of ‘XYZ’ at Rs.1,000 per share. The price of ‘XYZ’ shares starts falling after a few days. When it reaches Rs.900, you decide to set the stop-loss at Rs.850. It means you’ll wait till it drops to Rs.850 to exit the investment position. The next day, the stock opened lower at Rs.840 triggering your stop-loss and you existed the investment in ‘XYZ’ at Rs.840 booking a loss of (Rs.1 lakh-Rs.84,000) Rs.16,000. But later, the price of ‘XYZ’ fell to Rs.600. Since you had no position in XYZ share, you avoided a bigger loss, thanks to your stop-loss.

    As such, it’s crucial to strictly follow your stop-loss when you invest in shares. It can help in minimising your losses. When the price of your stocks moves up, you should simultaneously shift the stop-loss upward or as per predefined percentage of the stock price to ensure that you can lock the gains. The process of gradually shifting the stop-losses in sync with the movement in the stock price is called trailing stop-loss.Diversify your investments among fundamentally strong shares

    Choosing fundamentally strong shares has several advantages including a quicker recovery after a fall in the stock market. So, while selecting the stocks in your portfolio, focus on fundamentally-strong shares with solid track records, low or zero debt in books, good cash-flow levels, high growth in revenue, attractive profitability, and a promising growth plan. You should aim at adequately diversifying your investments into different sectors and into shares of other companies to minimise risks. Having excess exposure in a single sector and a few companies can increase your risk if that particular sector or the stock underperforms.Avoid over-investing and use SIP mode if you’re a beginner

    You must assess your risk appetite before investing money in the stock market. Always invest as much as you can afford to lose. The stock market is highly volatile, you should invest only if the daily ups and downs don’t impact your daily finances. If you can ably do stock market analysis, direct investments in the stock market can be highly rewarding in the long term provided you understand the risks too. It’s crucial to avoid over-investment, i.e., investing over and above your risk appetite and financial capacity. Over-investment in shares can result in heavy losses if the market condition becomes adverse. For beginners, systematic investment plan (SIP) investments in top-rated equity mutual funds can be a better option to earn good returns in the long term.

    (The writer is CEO, BankBazaar.com)

    Advantages of long-term investments over short-term speculations on the stock market – investmentanalysis.co

    Open a Demat Account Online – Demat Account Opening at Upstox

    Stock market – Wikipedia

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