Exxon and Chevron Can Push Dow Over 17,000

Investing

Published: June 22, 2014 9:33 am

Last Updated: June 23, 2014 6:25 am

Of the 30 stocks in the Dow Jones Industrial Average, a nearly infinite combination of their advances could put the index over 17,000 for the first time. The Dow stands at 16,947, up 2.2% for the year. Among the 30 the most likely to surge in the short term are Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX).

Exxon has the second-largest market cap of among U.S. publicly traded companies, at $446 billion, behind Apple Inc.’s (NASDAQ: AAPL) $548 billion. Chevron is eighth at $252 billion. Based on those sheer sizes, they have an out-sized effect.

Chevron shares recently hit an all-time high of just above $132. Part of its advance was caused by the sale of some assets in Chad, but the rush up in oil prices has been a major component. Its cash flow will presumably be helped by crude prices which have reached nearly $110 as well. Crude traded for $96 just three months ago. As problems in the Middle East worsen, oil prices could run higher by another $10, according to a number of analysts. The oil price dynamic holds true for Exxon as well.

One more reason the two oil companies may be the major force in pushing the DJIA over 17,000 is that the other huge market cap stocks in the index may have run as high as they will for the time being. Microsoft Corp.’s (NASDAQ: MSFT) large presence in cloud computing has been factored into its price, as has the tremendous competition in that sector–competition which will drive cloud prices and margins down.

The good news about PC growth which caused an improvement in Intel Corp.’s (NASDAQ: INTC) is weeks old. Its effects are, therefore, over. That is not any catalyst to improve Wall St.’s opinion about the stock.

Finally, if any stock in the DJIA has a downside risk it is Wal-Mart Stores Inc. (NYSE: WMT). It has not found a solution to floundering U.S. sales. And it is besieged by a public and employees who believe its practice of paying workers little more than the minimum wage keeps many of its “associates” living below the poverty line.

Oil prices are up for good reason and almost certainly will rise. Exxon and Chevron are likely to rise with them, and along with that push the DJIA over 17,000

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