Will the EU Summit Sink the Dow?
It seems a tough chore this morning, but markets are looking to continue their recent uptrend today after the Dow Jones Industrial Average (INDEX: ^DJI) flatlined yesterday, dropping a mere 1.7 points to 12,502.8. The Nikkei was down nearly 2% overnight, and as the EU summit kicks off, European markets are following suit, with the FTSE also down nearly 2% as of this writing. U.S. futures are indicating a lower open, but markets hope to build on the existing sales data with a strong new home sales report. Consensus estimates are calling for 335,000 sales, up 2.1% from March. A good number should provide a boost, but as we saw yesterday, any noise from overseas could punch a rally straight in the gut.
Pack it in, Packard
Shield your eyes folks -- this one could be ugly. Today investors have the pleasure of hearing Dow component Hewlett-Packard (NYS: HPQ) report second-quarter earnings after the market closes. HP has become something of a train wreck of late; it's an awful sight, but you just can't seem to look away. That's evident in its title of worst year-to-date Dow performer, down 15.5% versus a positive 2.3% return for the broader index. Don't expect much positive sentiment leading up to the report, either, as fellow PC manufacturer Dell (NAS: DELL) came out with terrible numbers yesterday afternoon. Dell's 12% revenue decline in its consumer business doesn't bode well for HP, which has nearly half of its revenue tied to printers and PCs. Yet HP seeks to reduce margin pressures from its stagnant top line by cutting out more than $1 billion in personnel costs.
Also reporting earnings today is enterprise storage company NetApp (NAS: NTAP) . Investors will be paying close attention to the margin impact caused by supply shortages in the aftermath of Thai flooding last year. This margin impact is evident in the consensus analyst estimates calling for 7% EPS growth to $0.63, despite double-digit revenue growth. Aside from short-term supply issues, the rise of cloud computing services poses a long-term threat to enterprise storage providers.
On Monday, EMC (NYS: EMC) announced the acquisition of a cloud-based enterprise file-management company, Syncplicity. With the rapid adoption of consumer cloud storage services such as Dropbox, enterprise customers are seeing increasing amounts of company data being stored in the cloud by employees, and they're looking for more secure environments that offer the same convenience.
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At the time this article was published Brenton Flynn has no ownership interest in the companies mentioned. The Motley Fool owns shares of EMC.Motley Fool newsletter serviceshave recommended buying shares of Dell. The Motley Fool has adisclosure policy. We Fools may not 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.