Dow Recovers From Heavy Morning Losses


Better-than-expected durable-goods orders weren't enough to excite investors early in trading today, as stocks were weighed down by the thought of an eventual end to easy money from the Fed. But markets recovered from this morning's big losses, and by 3:15 p.m. EDT the Dow Jones Industrial Average was at breakeven, while the S&P 500 was off by just 0.15%.

The only significant economic news was a Department of Commerce report saying that durable-goods orders rose 3.3% in April after falling 5.9% in March. If you take out the transportation sector, which can be volatile, orders rose 1.3% on broad-based gains.

The Dow would be down much further if not for a 3.7% gain in Procter & Gamble's stock price. After the market closed yesterday, it was announced that CEO Bob McDonald will be replaced immediately by former CEO A. G. Lafley. As fellow Fool Dan Dzombak pointed out earlier today, activist investor Bill Ackman has been pushing for a leadership change because P&G has been underperforming both the market and its peers. It'll take time to figure out whether Lafley can squeeze more value out of the company's operations, but for now investors are excited about the possibility.

Wal-Mart is the only other Dow stock moving significantly higher, gaining 1.2% today. The stock has been under pressure since reporting a 1.2% decline in first-quarter same-store sales, but even worse results from Sears yesterday may shrink the number of competitors Wal-Mart has to deal with. Sears' revenue dropped 9% in the first quarter, and the company lost $279 million, which leads to further speculation that Sears will eventually have to fold. At the very least, we know Sears is selling off assets and contracting its business instead of expanding. For Wal-Mart, that's good news, because Kmart is in the Sears family, and the two retailers share the same target customer. A smaller Kmart should mean more revenue for Wal-Mart in the long term.

Shares of chipmaker Intel fell 0.8% today after the company released some specs for its Haswell line of chips. The company said the new chips consume 50% less power when in "active" mode and in "idle" mode offer two to three times the battery life of current Core chips. This is an effort to improve performance in the emerging tablet-PC crossover segment, which is where the PC business is headed. It'll take time to see whether the chip is integrated into more devices, but the stats are impressive enough that it should get a close look.

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Fool contributor Travis Hoium manages an account that owns shares of Intel. The Motley Fool recommends Intel and Procter & Gamble. The Motley Fool owns shares of Intel. 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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