Why the Dow Popped
The bulls are back!
After two sour weeks with poor macro news weighing on markets, the bears have been put back in hibernation (if only briefly) thanks to strong earnings reports from global bellwethers.
With that in mind, let's examine how the major indexes fared today and then take a closer look at three stocks making news.
Gain / Loss
Gain / Loss %
|Dow Jones Industrial Average (INDEX: ^DJI)||194.13||1.50%||13,115.54|
Source: Yahoo! Finance.
The Dow closed above 13,000 for the first time since April 5, thanks to its nearly 200-point jump, while the Nasdaq's particularly strong 1.82% gain made up for yesterday's tumble and then some. A good Spanish bond auction and decent housing data filled the tank, but it was individual companies driving the market, so let's focus on several of the day's hot hands.
Kicking it off was Dow component Coca-Cola (NYS: KO) , which reported strong numbers even from mature markets, thanks to price increases taking hold and causing shares to rise 2.1%. Globally, volume grew 5%, which is a testament to Coke's brand that it can successfully pass on commodity prices to consumers while picking up more sales.
Oddly enough, not all the earnings were super strong. For instance, Johnson & Johnson (NYS: JNJ) traded flat after reporting mixed results, showing further weakness in the consumer segment, where quality issues continued to affect performance. Strong international growth over 16% and the revenue from potential blockbuster Zytiga weren't enough to obscure the fact that pharmaceutical-segment sales dropped nearly 11% domestically. J&J has had a bumpy few years, but its vast international exposure puts it in countries seeing more rapid growth, and when the Western economies get back into full swing, medical-device sales should rebound as well.
Notorious investment bank Goldman Sachs (NYS: GS) also turned in a seemingly strong showing, but the market was unimpressed, making it one of today's rare decliners, down 0.7%. Sure, revenue came in light, non-equity trading was challenged, and underwriting was down 40%, but it still remained numero uno on the street for mergers and acquisitions. Besides, earnings handily beat expectations, and the company substantially raised its dividend 31% to $0.46 a quarter while lowering its risk profile. Investors waiting for Goldman to regain its past glory may have to wait longer, but the good times will roll again, especially when M&A activity begins to pick back up.
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At the time this article was published David Williamsonowns shares of Johnson & Johnson and Coca-Cola, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Johnson & Johnson and Coca-Cola.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson, Coca-Cola, and Goldman Sachs and creating a diagonal call position in Johnson & Johnson. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.