Microsoft's Rise Can't Stem the Dow's Losses
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.
Stocks have slid sharply lower today, knocking down yesterday's gains as the markets tilt into the red. The Dow Jones Industrial Average has fallen all day, and as of 2:15 p.m. EDT, the blue chip index has lost more than 80 points. Most stocks are in the red today, but Microsoft is doing its part to hold the Dow back from even sharper losses. Let's catch up on all the action you need to know.
Will Gates go?
Microsoft CEO Steve Ballmer's resignation has pushed the company into a period of transition, and for some shareholders it's time to shake things up even further. Three major stakeholders controlling more than 5% of the company's stock reportedly have lobbied for company founder and Chairman Bill Gates to resign from the position. The shareholders believe Gates holds too much power and influence in his role, and that his stepping down will help bring change to a company that has struggled to embrace the evolving tech market. The stock's up more than 1% today on the winds of change.
Gates has slowly been reducing his stake in the company by selling off shares each year, but change could be a good move for the company despite its success over the past decades. However, Microsoft's outlook isn't as bad as some investors might think. The company's three largest divisions have all posted year-over-year sales gains through the first half of 2013, and even the firm's entertainment and device division -- Microsoft's foray into the consumer tech world responsible for products like the Xbox and Windows phone -- has posted growth this year despite tough competition.
Investors may want Gates to go, and change will be good for Microsoft -- but too much change could shake its foundation more than is necessary for what's still one of the strongest companies in the world.
A pair of manufacturers are having drastically different days today. Caterpillar's stock has risen about 0.3%, even as this stock continues to struggle among the Dow's worst performers of the year. The company -- and the manufacturing sector as a whole -- did get a boost earlier today when the Institute for Supply Management reported that the United States' Purchasing Managers Index picked up for the fourth consecutive month in September. The PMI's reading advanced to 56.2, its highest mark of the year where any reading above 50 shows sector growth.
Yet growth has remained elusive for Caterpillar. The company's sales have plunged across its geographic regions - not just in Asia, but also in drastic decline in the Europe and Middle East region. North America's the largest segment for the company, and while the surging housing market may help Caterpillar rebound slightly, the company will need industrial activity to pick up worldwide if it wants to turn around struggling sales and impress investors who have been disappointed this year.
United Technologies certainly isn't feeling any love from the PMI, as the industrial conglomerate's stock has slipped 2.7% today to lead the Dow lower. The company's close defense ties leave the U.S. government shutdown a tricky proposition for it and many defense contractors, although UTC's widespread presence in civilian markets makes it less vulnerable to the whims of the Pentagon than pure defense product makers. However, UT's Sikorsky subsidiary already has slowed production of its Black Hawk line of helicopters, a move that could negatively impact the company's financial performance after winning an $8.5 billion deal to build the craft last year. For UTC investors, a quick resolution to Washington's impasse is the best outcome.
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The article Microsoft's Rise Can't Stem the Dow's Losses originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. 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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