Dow Soars After Solid Industrials Earnings

The Dow Jones Industrial Average (INDEX: ^DJI) flew out of the gates when the markets opened on good industrial earnings reports. Investors were bullish on the blue chip industrials as Fed officials are growing perturbed with the sluggish economy and could be close to implementing more measures aimed at providing cheap credit to banks in an attempt to spur economic growth. The Dow is significantly outperforming the Nasdaq, as technology companies are down after a string of poor earnings reports, starting with Apple's significant miss yesterday after the markets closed.



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Source: Yahoo! Finance as of 2:30 p.m. EDT.

Before we get into the underperforming technology sector, two Dow Jones components recorded surprisingly strong second quarters. Caterpillar (NYS: CAT) shocked Wall Street after posting second-quarter EPS of $2.54, beating expectations by a healthy $0.26. The company's $17.4 billion revenue, a 21% increase from Q2 2011, was especially significant after Caterpillar was punished by investors based on fears that the slowing global economy would undermine the company's sales.

The other component reporting today was Boeing (NYS: BA) , up 3.07%, after turning in a quality quarter with earnings of $1.27 per share, beating estimates and last year's EPS. Commercial airplane deliveries increased 27% while its defense, space ,and security segment produced higher revenue and increased margins.

Apple's miss was perhaps the most disappointing news yesterday, but it was not the only company tripping up the Nasdaq. Netflix (NAS: NFLX) shaved off a quarter of its share price so far today after lowering its outlook for the remainder of 2012. Despite beating expectations for the past quarter, the company said it might not meet its new streaming subscriber goal of 7 million customers.

TripAdvisor (NAS: TRIP) is also slumping significantly, down 15.83%, after posting profits of $54.1 million or EPS of $0.41. Soaring costs and expenses increased 33%, cutting into the bottom line as well as a stellar 72% year-to-date increase in share price.

So far the Dow Jones Industrial components have turned in strong second quarters for the most part, despite the growing concerns brewing in Europe and the slowdown in China. The solid performance despite the headwinds facing the Dow is a testament to the quality of all 30 of the companies. The good news for investors is established companies are less volatile and offer steady, often increasing dividends. For this reason we have a special report, "3 Dow Stocks Every Investor Needs." Check out this free report and pick up three companies you can confidently add to your portfolio to bring consistent future returns.

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Joel South owns shares of no company listed above. The Motley Fool owns shares of Apple, Netflix, and TripAdvisor. Motley Fool newsletter services have recommended buying shares of Apple, Netflix, and TripAdvisor. Motley Fool newsletter services have also recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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