Dow Surges After Announcing Biggest Shake-Up in a Decade
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The Dow Jones Industrial Average is headed higher today, up 0.75% as of 3 p.m. EDT. Markets have climbed higher today as anxiety regarding U.S. military action in Syria eased after the country announced it would hand its chemical weapons over to international authorities. Though the U.S. still hasn't ruled out a possible military strike, it would seem tensions are significantly reduced after the announcement. In other news, S&P Dow Jones Indices announced that it will replace three Dow components after the market closes on Sept. 20. Here are the details of that announcement and today's big movers.
Shaking it up!
Effective Sept. 23, Nike will replace Alcoa, Goldman Sachs Group will replace Bank of America, and Visa will replace Hewlett-Packard. Following the news, shares of Nike gained 1.7%; Visa shares rose 2.9%; and Goldman Sachs climbed 3.6%. It's the biggest shake-up in a decade, and Nike is the first apparel inclusion since 1933, according to S&P Dow Jones Indices records.
McDonald's is up 0.3% after the company released its August comparable-store sales numbers. Its global comparable-store sales increased 1.9%, beating estimates. That being said, year-to-date figures paint a darker picture: Global comparable-store sales are up only 0.4% through August compared with a 4.4% increase through the same time frame last year.
In the long term, McDonald's has a battle on its hands as competition continues to focus on older generations with fresh foods and a modern store appeal, while Ronald McDonald and his happy meals continue to play the kids' game. It's a move that could hinder future sales growth, as McDonald's didn't rank in the Millennial generation's top 10 restaurant chains, according to Ad Age. McDonald's isn't ignoring that now, and it plans to reimage 1,600 stores and upgrade its menu offerings.
Cisco is trading higher today, up 1.3% after it agreed to buy privately held Whiptail for $415 million. The company is a provider of solid-state memory systems that Cisco can use as new tools for data storage. This is just another small piece of the puzzle as Cisco continues to acquire small companies to try to evolve its business.
"We are focused on providing a converged infrastructure including compute, network and high-performance solid state that will help address our customers' requirements for next-generation computing environments," said Paul Perez, vice president and general manager of the Cisco computing-systems product group, in a Cisco press release.
In other overseas news, China's National Bureau of Statistics reported that August retail sales rose 13.4% year over year and 1.17% over the prior month, according to Morningstar. This may have provided an additional boost for Ford and General Motors, which are up 1.7% and 1.6%, respectively, as both eye China as a huge growth opportunity. As China continues to evolve into a consumption economy and the middle class grows, some analysts predict that automotive sales will go from roughly 19 million annually to nearly 30 million -- an astounding increase and nearly the amount all automakers sold in Europe last year.
With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!
The article Dow Surges After Announcing Biggest Shake-Up in a Decade originally appeared on Fool.com.Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Cisco Systems, Ford, McDonald's, and Nike. The Motley Fool owns shares of Ford, McDonald's, and Nike. 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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