Why the Dow Got an Earnings Boost This Morning
With earnings season underway, the first round went to the bulls. Alcoa reversed a year-ago loss, beat revenue estimates, and, best of all, provided guidance toward stronger aluminum demand in 2013, so investors are starting to think the quarter might not turn out so badly as they'd feared. Even though Alcoa's stock is flat, the broader market responded well: As of 10:55 a.m. EST, the Dow Jones Industrials were up 74 points, with the broader market also tracking higher as well.
Elsewhere within the Dow, Boeing bounced back, climbing more than 3% a day after a Japan Airlines 787 Dreamliner had a fuel leak. Although the stock lost altitude yesterday, several analysts argue that the episode simply marks a standard minor issue for a new aircraft design and should have no substantial long-term impact on Boeing.
Among other big movers, Apollo Group has lost more than 10% on a bad day among for-profit education providers in general. Apollo announced that its new enrollment figures fell for the third quarter in a row, with drops of 14% in total enrollment and 15% for new students. Several analysts followed suit with downgrades on the stock, and so long as the industry remains under threat from federal regulators, it'll be hard for Apollo and its peers to rebound.
Finally, the ongoing battle at Herbalife just saw another entrant as activist investor Dan Loeb entered the fray by taking an 8.2% stake in the beleaguered company. With the purchase of 8.9 million shares, Loeb is going head to head against short-seller Bill Ackman, who has made a well-publicized push against the company, including allegations that Herbalife is a pyramid scheme. Shares are up 2.8% so far today. Trading a stock like Herbalife right now is risky business, but observing the back-and-forth makes a fascinating lesson for investors.
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