Syria Can't Stop the Dow From Rising

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The markets rallied higher today despite the likelihood of U.S. military action in Syria. The Dow Jones Industrial Average closed the day up 96 points, or 0.65%, and now sits at 14,930. The S&P 500 gained 0.81% and the Nasdaq increased 1.01%.

These moves higher came as July's trade deficit met analysts' expectations of $4.6 billion from June and the Mortgage Bankers Association reported a 1.3% jump in mortgage applications this past week, compared to the previous period.  

As the Dow closed the day up nearly 100 points, only four of its components ended the session in the red. This afternoon, I explained why Microsoft and Procter & Gamble were lower, which you can read about by clicking here, or stick around to learn why Hewlett-Packard and IBM lost value today.

Shares of Hewlett-Packard fell 0.45% on very little news directly about the company. But that doesn't mean nothing important happened to HP today. We all know the company is currently going through a transition period in which CEO Meg Whitman is attempting to turn the company around and take its business mix to an area that is less reliant on PC sales. The recent move by Microsoft to purchase Nokia, however, may actually have a negative effect on HP.

First, the move means that if HP were to go with a Windows-based operating system on one of its smartphones, it may no longer be able to do so. Also, as a Morgan Stanley analyst recently noted, a new Microsoft CEO will now need to spend a good deal of time merging the company with Nokia, which may take attention from other areas of Microsoft's business, one of them being the Windows PC operating system, once believed to be the saving grace for falling PC sales. A lack of attention to PCs from Mr. Softy will ultimately hurt HP even further as it is unlikely its business will ever become fully disconnected with PCs.  

As for IBM, it also lost 0.45% of its value. The stock is now trading within 1.18% of its 52-week low and off its 52-week high by more than 15.17%. Year to date, the stock is down 4.4%, making it one of only three Dow components to be in the red for the year and the third-worst performer in 2013, behind only Alcoa, which is off 9.68%, and Caterpillar, which is down 6.77%. IBM seems to be struggling to keep up with the competition as more players like HP are moving into the coveted IT services business. Just a few days ago, HP signed a deal with Cerner, an IT health-care giant, to upgrade two of its analytics services. Just a few years ago, IBM, as one of the only players in the market, would have likely gotten the job. Clearly, that's no longer the case.  

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