Banks such as Citigroup [NYSE:C], Bank of America [NYSE:BAC] and JPMorgan Chase [NYSE:JPM] are facing refinancing challenges as some bonds reach maturity.  In the current market, refinancing those bonds may prove challenging further adding to the challenges facing these banking behemoths.  Interest rates have crept up slightly; investors may require a premium from banks, given potential exposure to the mortgage mess.  Currently there are close to $200 billion in bonds coming due; the bulk of the refinancing will likely occur in December.   The increased cost of borrowing will further depress bank earnings over the next few quarters.

Many Dow component stocks have dividend yields a levels not see for many years. The dividend yield is the annual cash that the company pays to shareholders for each share of stock that they own divided by the price of that stock.  So, for example, if a company is trading at $10 a share and pays a dividend of 50 cents per share each year, the dividend yield is 5%.  While higher yields in individual stocks have occurred is the past, the number of companies with high yields today that is what's unusual.  Normally, high dividend yields are seen as a sign of value--in this case, perhaps, extraordinary value.  However, some analysts caution about a "value trap."  The reasoning goes something like this: the dividend yield is high because the company is in serious financial or business trouble.  These problems are recognized by the market and are reflected in the low stock price.  For a given dividend, the lower the stock price goes, the higher is the dividend yield.  Even though stock prices are low now (and the dividend yields are concomitantly high), the price of the stock could go even lower if the company is in serious trouble.  Alternatively, as has happened already, the dividend could be cut in order to preserve cash.  Having said that, high dividend yields from quality companies are often a sign that more study is needed.  Stocks can lose value for reasons other than financial problems.  In fact, if the financial or business problems can be satisfactorily addressed, the share price usually recovers.  The companies in the Dow are usually among the largest and best capitalized in the market, so they warrant special attention.  Listed below is a number of Dow component stocks and the accompanying dividend yield.

• Bank of America [NYSE:BA] 8.3%
• Citigroup [NYSE:C] 6.9%
• Pfizer [NYSE:PFE] 6.4%
• AT&T [NYSE:T] 5.1%
• Verizon [NYSE:VZ] 5.1%

All in all great companies, but each faces short term challenges.  More investigation is certainly in order.

In what is either great news for the housing market or a prime example of earnings' management, Lowe's Co. [NYSE:LOW] surprised the market by beating analysts' expectations.  The housing supply superstore giant, and competitor of Atlanta based Home Depot [NYSE:HD], turned in what for this market can only be described a s stellar performance.  Lowe's earnings did fall 8 percent to $938 million, or 64 cents a share, for the quarter which ended August 1, from $1.02 billion, or 67 cents a share, a year earlier. However, analysts had forecast earnings of around 56 cents a share; eight cents lower than the earnings reported by Lowe's.  The chain also raised its profit forecast for the rest of the year.  Lowe's stock rose four percent in early trading on August 18, 2008.