Markets Rise After the Official Kickoff to Earnings Season


Now that earnings season officially has begun, with Alcoa's earnings release yesterday after the market closed, over the next few weeks investors will be getting back to the fundamentals of investing -- revenue, profits, and individual financial performance. Today's move higher on the Dow Jones Industrial Average after losing on Monday and Tuesday is a good indication that investors may have underestimated companies' earnings power in the last quarter. The index gained 61 points, or 0.46%, today and now sits at 13,390. Could this earnings season produce a number of large moves to the upside?

Even on days when the markets move higher, though, there are usually a few losers tossed into the mix. Of the Dow's 30 components, 12 of them ended the trading day in the red. The three biggest losers on the Dow today were AT&T , Bank of America , and ExxonMobil .

So what happened?
Shares of AT&T were down 0.32% today, while its fellow telecommunications and Dow component Verizon saw its shares drop 0.23%. As the battle over Clearwire's spectrum heated up today, with DISH Network outbidding Sprint Communications, investors may be realizing that the two top dogs of the telecommunications industry may not have as large of a moat around them as some previously suspected. Regardless of who ends up with Clearwire's valuable asset, it's clear that other players are attempting to move into the duopoly's market and steal some business.

Bank of America was easily the worst performing Dow stock today, as shares fell by 4.59% after Credit Suisse downgraded the stock from "outperform" to "neutral." Moshe Orenbuch, the analyst who made the change, simply believes the stock has moved too high, too fast, and that the valuation has gotten ahead of itself. While most investors never want to see a downgrade, this one is probably warranted to an extent, since B of A was up more than 100% in 2012, but I don't believe this means that everyone should be selling the bank at these prices.

Lastly, shares of ExxonMobil fell by 0.38% during today's trading session. Fuel inventories are causing some concern in the commodities markets, which caused the price of oil to slide lower today. Over the past few weeks, a number of analysts and investors have made bold predictions that the price of oil will fall in 2013 and even perhaps below the $70-per-barrel range. That would certainly have an effect on the large oil companies' stocks, moves we may already be seeing.

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Matt Thalman owns shares of Bank of America. The Motley Fool owns shares of Bank of America and ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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