The Dow Surges as ECB Provides Support for the Euro


The broad markets jumped in a big way today, with the Dow Jones Industrials (INDEX: ^DJI) climbing 1.65% after the European Central Bank stated it will be prepared to do whatever is necessary to preserve the euro. The ECB will close the funding gaps by restarting its government bond repurchasing program, giving member banks easier access to capital with the hopes of providing increased lending as a means to spur the economy. No plan of action has been decided on, just reaffirmation from ECB President Mario Draghi that extensive measures will be used if the situation deteriorates.

The boost of confidence from Europe brought a systemic lift to the overall market, but the day still had its share of significant winners and losers.

The biggest disappointment today was game provider Zynga, which badly missed analyst estimates, reporting a quarterly net loss of over $22 million and reducing its 2012 outlook. The company is down 40% so far today and continues to drag Facebook (NAS: FB) with it. The social network company announces its first quarterly earnings report tonight after the markets close.

Dow Chemical also disappointed investors with its earnings this morning, giving a glimpse of the overall economy in the second quarter. With offerings in just about every sector, Dow Chemical was greatly affected by weak demand, sending net income plummeting 34%. The company is down 3.2% on the day after announcing EPS of $0.55, which missed estimates by $0.09 per share.

Cliffs Natural Resources (NYS: CLF) is down 6.2% after beating EPS estimates but missing on revenue. Typically, Cliffs Natural is strongly positioned in the United States coal industry, but coke coal sales were significantly down due to decreasing global construction and the slowdown in China.

The energy sector is turning in a pretty solid day. Benchmark WTI oil prices are up 0.6%. In the oil services and equipment industry, National Oilwell Varco (NYS: NOV) did not disappoint in the second quarter, with quarterly profits increasing by 26% and EPS exceeding expectations at $1.46. The company continued growing its offshore rig orders, adding five more, securing a decent chunk of long-term revenue, as the rigs will need to be serviced and equipped for the next 20-plus years.

Also rising today is InterOil (NYS: IOC) , the integrated oil and gas company with operations in Papua New Guinea. The rumor mill says Royal Dutch Shell is discussing a possible deal with the company. InterOil is trying to find a buyer for a 25% stake in the planned 9 million metric ton per annum LNG facility. The deal could be extremely lucrative for Shell, as the LNG facility is located on an inexpensive gas field and is close to the lucrative Asian Pacific market.

Long-term view
Today the ECB brought tidings of joy, declaring it will do whatever is necessary to keep the euro together. However, talk is just that -- talk -- and the debt situation is extremely precarious. The U.S. economy still has a long road of recovery ahead of it, meaning investors need to continually search for excellent investments that will provide a strong and secure return on investment. For this reason, The Motley Fool has assembled a list of nine rock-solid dividend stocks every investor needs to be familiar with. This report is absolutely free, so be sure to get your copy today!

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Joel South owns shares of no company listed above. The Motley Fool owns shares of National Oilwell Varco and Facebook. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco. The Motley Fool has a disclosure policy.
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