Why 1 Dow Sector Is Getting Rocked Today
The Dow Jones Industrial Average (INDEX: ^DJI) opened sharply lower in early trading and gave back as much as 1.5% by noon. After recovering marginally, here is a look at how the Dow and the other two major indexes are faring right now.
|Dow Jones Industrial Average||(127.0)||(1.02%)||12,375|
Today's sad faces
Off the Dow, it's a tug of war between conglomerates and energy for the worst-performing sector of the day, with both down around 1.75% on average. On the Dow, it's tech that's taking it on the chin, with the three worst-performing stocks of the day being Hewlett-Packard (NYS: HPQ) , Intel (NAS: INTC) , and Microsoft. These three lords of tech are down 4.5%, 3.0%, and 2.8%, respectively.
It's no big mystery as to why Dell (NAS: DELL) sent shock waves through the sector today with its abysmal earnings. Both results and guidance came in below expectations. Revenue only dipped 4%, but earnings fell by a full third. The news adds a bit of credibility to the "PC is dead, long live mobile" mantra of late. Unfortunately for our Dow trio, the concerns about the proliferation of mobile and weak tech spending that plagued Dell today can easily be translated to their own businesses.
Microsoft's Windows and Office divisions contribute a combined 60% of its revenue, while servers and tools contributes another 26%, and for all its strides toward Windows 8, Microsoft still remains firmly anchored in PCs. Intel is making similar transitions toward mobile chips, but with its PC client group comprising 65% of revenue, it still has a long way to go. Hewlett-Packard is the nearest competitor to Dell with regard to its business model and products, so it makes sense that HP would take the news the hardest.
While the company has been plagued by weak management and strategy of late, HP also recently regained its market-share crown from Apple (NAS: AAPL) after it was reported that it shipped 40,000 more PCs than Apple in the first quarter, so Dell's difficulties may not make for a true apples-to-apples comparison with HP.
With the tech sector today taking a big haircut today and Apple showing resilience to the news, many investors may be convinced it's time to buy shares. Whether you're a current shareholder adding a bit more, or a sideline investor waiting to hop in, you need to read our top analysts' Apple report before doing anything. You can read more about it here. It's also updated every quarter free of charge.
What to make of it
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At the time this article was published Austin Smith owns no shares of the companies mentioned here. The Motley Fool owns shares of Intel and Apple. Motley Fool newsletter services have recommended buying shares of Dell, Intel, and Apple, as well as creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.