Dow Rises as Boeing Stalls Out
The Dow Jones Industrial Average is up 0.58% late in today's trading on mixed earnings reports and economic data. One broad trend to consider is that September retail sales fell by 0.1% compared to August. This owes partly to the fact that automotive sales from the Labor Day holiday were pulled into August figures. Another unfavorable trend was consumer confidence dropping to 71.2, short of expectations of 75 -- the government shutdown clearly had a negative effect. With those trends in mind, here's a look at some of the movers and shakers in the markets today.
Boeing's F-15 Silent Eagle. Source: Boeing.
As I wrote about a month ago, Boeing received a slap in the face when South Korea rejected the aerospace giant's bid to deliver 60 fighter jets, even though Boeing offered the lone bid that met the government's original $7.8 billion budget figure.
Now Boeing says it's open to having South Korea buy a mix of its F-15 Silent Eagle fighter jets and Lockheed Martin's F-35 model.
"If it turns out a split of 40 F-15s and 20 F-35s is the right answer, then, of course we will want to participate in that," said James Armington, vice president for East Asia-Pacific business development at Boeing's defense unit, according to a Bloomberg report. "Whatever the requirement is determined to be, whatever the need is determined to be, we definitely want to participate."
South Korea primarily rejected Boeing's original bid over doubts that the F-15 is sophisticated enough to counter North Korea's nuclear threat. One previous Boeing F-15 pilot countered that the Silent Eagle's speed, payload, and use of "standoff" weaponry would make it a better asset when attacking nuclear weapons, which make challenging targets.
Winning a partial South Korean contract would still be big for Boeing and its investors, considering that the company's defense segment is expected to shrink as major U.S. budget cuts take place -- up to $1 trillion over the next nine years.
Outside the Dow Jones, Goodyear Tire & Rubber is declining sharply, down more than 6% after reporting that its revenue declined 5% in the third quarter. Still, the company's third quarter wasn't all bad.
Third-quarter operating income was up 24% to $431 million. It showed year-over-year quarterly earnings improvement in all of its four business segments and had record North America earnings of $161 million for the quarter.
"As the industry continues to recover, we see strong volume growth in the segments we are targeting," said Richard J. Kramer, Goodyear chairman and CEO. "While we continue to be disciplined in our approach, we are seeing growth in unit volumes, including in our North America business, driven by the Goodyear brand."
Going forward, Goodyear now expects a record 2013 segment operating income of more than $1.5 billion. Goodyear also continues to target positive cash flow, pension prefunding excluded, through 2016.
America's largest automaker, General Motors reports its third-quarter earnings tomorrow. Seventeen analysts polled by Bloomberg expect earnings per share to reach $0.93. While General Motors sells more vehicles abroad than it does in North America, the latter still brings most profits. Profits could be a bit stronger as GM's recently launched 2014 Chevrolet Silverado is its most profitable and best-selling vehicle in North America. Motley Fool senior auto analyst John Rosevear takes a closer look at what to expect.
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