It's All About Earnings for the Dow Today


Over the years, there have been a few complaints about the way the Dow Jones Industrial Average is calculated, and today will likely add fuel to that fire. As of 12:40 p.m. EST the Dow is up 61 points, or 0.45%, to 13,773 -- even though 19 of the index's 30 components are currently in the red. The only reason the Dow isn't sinking today is that International Business Machines has gained 5%.

IBM is weighted at 10.98% of the index, therefore when it moves, the index moves. IBM essentially has the same weight as the smallest eight Dow components combined, and today it's marching upward thanks to the positive earnings report it released this morning. For more on IBM's earnings release, click here.

There's no shortage of losers on the Dow today, but understanding why they're moving lower can help investors make intelligent trading decisions. Three of today's losers are Verizon , Intel , and Hewlett-Packard .

So why are they down?
Shares of Verizon are down after the company announced earnings yesterday. The company missed analysts' expectations, but some believe the announcement pointed toward long-term strength for the wireless-service provider. The company sold a record number of smartphones during the quarter, but due to the subsidies it pays in exchange for long-term service contracts, the company posted earnings per share at $0.45, falling $0.05 short of estimates. Short-term investors are likely fleeing from the stock today, causing the price to drop by 0.6%.

Shares of Intel have slipped 0.4% after the company's closest competitor, Advanced Micro Devices , announced earnings after the market closed yesterday. Advanced Micro and Intel both make chips for personal computers, which have seen sales numbers decline for the past year. Advanced Micro beat analysts' expectations this past quarter, which is likely an indication that the company is outperforming Intel.

Lastly, shares of Hewlett-Packard are down by 1.51% today after news that Microsoft may purchase a piece of PC manufacturer Dell. It has been reported over the past few weeks that Dell may be taken private. Microsoft comes into play because it is believed that they may contribute up to $2 billion dollars to take Dell off the open market. This move could tighten the relationship Dell and the software company have while putting further pressure on Microsoft's relationship with other PC manufacturers like Hewlett-Packard.

More foolish insight

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP is rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this just a detour on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

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Fool contributor Matt Thalman owns shares of Microsoft. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel, International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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