Even Cisco Couldn't Save the Dow This Morning
As earnings season draws to a close, the few late-reporting companies have the potential to make big impressions among news-starved investors. Yet today, great news from Cisco Systems wasn't enough to counteract weakness on the economic front: Claims for unemployment rose, while the Philadelphia branch of the Federal Reserve reported weakness in manufacturing activity in its region. Moreover, although the latest CPI figure confirmed the lack of inflationary pressures, housing starts plunged more than 16% to hit six-month lows. Combine all those factors, and the Dow Jones Industrials are down a modest 10 points as of 10:45 a.m. EDT. The broader market was mixed, with the S&P down but the Nasdaq up.
The Nasdaq owes much of its success to Cisco, which has soared more than 11% after reporting earnings last night. Previous reports from Cisco's networking competitors had led investors to expect relatively little from the tech giant's report, so news that Cisco's revenue and net income came in better than expected came as a big surprise. Cisco certainly has plenty of future challenges ahead of it as it seeks to reinvent itself as a broader-based IT leader, but last night's results give value-investors hope that betting on the stock at its low multiples will prove to have been a prescient move.
Elsewhere, Tesla Motors has returned to its winning ways after a one-day respite, rising 9% this morning. The latest from the company involves Tesla raising $230 million through a secondary stock offering, and while such moves often lead to falling shares due to shareholder dilution, CEO and co-founder Elon Musk's decision to invest $100 million in the share offering to avoid diluting his own stake in the automaker was a clear sign of optimism from the company's leader. Investors are also happy at the prospect that the proceeds might be used to pay down a Department of Energy loan, taking government financing out of Tesla's capital structure and avoiding some constraints that come with the loan.
Finally, chip maker Advanced Micro Devices has plunged 15% after an analyst downgrade threw cold water on the bullish sentiment stemming from its success in getting its chips into new gaming consoles. Even after the drop, though, the stock is still up more than 30% since the beginning of May, indicating the extent to which optimistic investors have counted on AMD's gaming focus to provide relief to the long-struggling chip-maker.
The article Even Cisco Couldn't Save the Dow This Morning originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems and Tesla Motors . The Motley Fool owns shares of Tesla Motors. 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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