Last week I explored the relationship between the stock market and
the imminent US strike on Syria in response to allegations that the Syrian
government recently used chemical weapons against their citizens. At that time
the market appeared to be in a holding pattern, evaluating the situation but
unwilling to make a move. However a lot has happened in the past week which has
clearly influenced investors.
Earlier this week the Senate Foreign Relations Committee
voted to give President Obama limited authority to
use force against Syria. The resolution would limit strikes against Syrian
forces to a period of 60 days, with the possibility of 30 more days after consultation
with Congress, and it would block the use of American ground troops.
The vote of 10 to 7
by the Senate Foreign Relations Committee capped a day of fierce debate in both
houses of Congress that indicated there is a widespread impulse to respond to the
deadly chemical weapons attack but deep divisions over how much latitude the
president should have to do so.
The Obama
administration said that while they expected the full Senate to vote next week,
after Congress returns from recess, they did not think the House would act
until the week after and were preparing for a prolonged debate. Senate leaders
agreed on Wednesday night to hold a brief session on Friday to put the war
resolution on the Senate’s calendar so the clock can begin counting down to a final
vote toward the end of next week.
Secretary of State
John Kerry argued the Obama administration’s case before the House Foreign
Affairs Committee stating that extremist groups fighting against the Syrian
government would become stronger if the United States did not carry out a
military strike. Mr. Kerry said the United States had worked hard in recent
months to persuade Arab nations and benefactors not to finance or arm the more
extremist rebels who are battling Mr. Assad’s forces. But if the United States
does not punish the Assad government, Mr. Kerry said, it is likely that some
Arab supporters of the Syrian opposition will provide arms and financing to the
best rebel fighters, regardless of whether they are extremists. “We will have
created more extremism and a greater problem down the road,” Mr. Kerry said.
However, most world
leaders do not believe that a US attack is the best course of action. UN
Secretary General Ban Ki-moon has warned that any military strikes against
Syria for an alleged chemical weapons attack are legal only in self-defense or
if approved by the UN Security Council. Ban also cautioned nations such as the
United States and France that may be considering such strikes that any
"punitive" action taken against Syria could unleash more turmoil and
bloodshed.
Pope Francis urged the world to abandon
the "futile pursuit" of a military solution in Syria. "To the
leaders present, to each and every one, I make a heartfelt appeal for them to
help find ways to overcome the conflicting positions and to lay aside the
futile pursuit of a military solution," Francis wrote in a letter to
Russian President Vladimir Putin as the G-20 meeting got under way in St.
Petersburg.
Russia opposes any outside
military intervention in Syria's civil war and says it suspects the gassings
were staged by rebels seeking foreign involvement in the conflict. Putin escalated concerns when he indicated in an interview that his country
could send the components of a missile shield to Syria and the region if the
U.S. attacks. U.S. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff,
testified this week that the Russians might even replace any military assets
the U.S. destroys in a strike. This raises the possibility of a
"limited" strike on Syria turning into a proxy war between Russia and
the U.S.
The United States
also claims to have intercepted an order from an Iranian
official instructing militants in Iraq to attack U.S. interests in Baghdad in
the event the Obama administration launches a military strike in Syria.
China is warning that any military action
against Syria will push up oil prices and hurt the world economy. Speaking in
St. Petersburg Thursday, Chinese Vice Finance Minister Zhu Guangyao said that
"Military action would have a negative impact on the global economy,
especially on the oil price - it will cause a hike in the oil price,"
before citing estimates that a $10 rise in oil prices could push down global
growth by 0.25 percent.
Oil prices are largely
unchanged in the past week with West Texas Intermediate currently at $108.37
compared to $108.80 last week and Brent Crude currently at $115.26 compared to
$115.16 last week.
Aerospace and defense
stocks have seen gains over the past week however.
52wk high: 126.729
52wk low: 85.88
EPS: 8.92
PE: 13.70
Div Rate: 4.60
Yield: 3.7055
Market Cap: 39.84b
Volume: 1.34m
52wk high: 109.49
52wk low: 69.03
EPS: 5.47
PE: 19.20
Div Rate: 1.94
Yield: 1.819
Market Cap: 80.46b
Volume: 2.59m
Northrop
Grumman (NOC) spiked from $92 to $94
earlier this week but has settled to just under $93 currently.
52wk high: 96.4201
52wk low: 62.80
EPS: 8.04
PE: 11.60
Div Rate: 2.44
Yield: 2.608
Market Cap: 21.41b
Volume: 54.39k
General
Dynamics (GD) experienced a $2 increase
earlier this week and is currently about a dollar higher than last week.
52wk high: 87.85
52wk low: 61.70
EPS: -0.85
PE: N/A
Div Rate: 2.24
Yield: 2.6359
Market Cap: 29.48b
Volume: 78.89k
Raytheon
(RTN) shares are also about a
dollar higher than last week after seeing an increase of more than $2 earlier
in the week.
52wk high: 77.93
52wk low: 52.24
EPS: 5.91
PE: 12.80
Div Rate: 2.20
Yield: 2.9024
Market Cap: 24.28b
Volume: 156.79k
In
light of the events and the market movement in these stocks this week it’s
apparent which way investors are leaning on the issue. If you haven’t already
examined the possibility of adding one or more of these to your portfolio then
now is the time to do so.
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