Dow Up 89: Cheery Day Before Earnings Season
With no compelling reason to be pessimistic today, Wall Street started the week off strong Monday, bidding stocks higher as Europe took further steps to stop the bleeding in Greece. Data today also show an abrupt jump in consumer borrowing, with Americans taking nearly $20 billion worth of debt in May, up sharply from the $10.9 billion more citizens borrowed in April. When all was said and done, the Dow Jones Industrial Average tacked on 89 points, or 0.6%, to end at 15,225.
UnitedHealth Group led all blue chips higher Monday, adding 2.1%, as the health insurer enjoyed the benefits of a favorable article in Barron's, making the case for a 40% run-up in the stock over the next several years. The staggered rollout of Obamacare is cited as the major catalyst for the stock's potential in the bullish piece, which Wall Street clearly paid attention to. Shares even hit a 52-week high during trading today.
Big-box retailer Wal-Mart Stores also outperformed, jumping 2% Monday. It's easy to see how Wally World could benefit from today's intel on consumer credit; in a consumer-driven economy, a rapid increase in personal debt is one surefire way to increase spending, and the ubiquitous retailer is no stranger to that concept. The third-largest company in the Dow has recently gotten creative in terms of how to ramp up in-store purchases, and it now even offers its own credit card and banking solutions.
Aluminum giant Alcoa gained 1.4% to start the week, ahead of the company's quarterly report this afternoon that unofficially kicked off the frenzy that is earnings season. Despite losing nearly $120 million in the second quarter, results beat estimates, and shares briefly spiked after-hours before they evened out. The loss was no surprise to Wall Street, which expected low aluminum prices to have a negative impact on the company.
Lastly, Intel shares stood out as the major laggard, slumping 3.6%, and ending as one of just four Dow components to fall on the day. The reason for the chipmaker's sluggishness in the otherwise bullish market Monday was a flurry of pesky, pessimistic analysts. Put simply, several different analysts noted that Intel isn't sufficiently keeping up with its mobile-minded competitors, and the shift to mobile devices threatens to weaken the business' margins, even with the company's new Atom processor hitting the streets.
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The article Dow Up 89: Cheery Day Before Earnings Season originally appeared on Fool.com.Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.The Motley Fool recommends Intel and UnitedHealth Group and owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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