The Coca-Cola Company is Keeping the Dow Afloat Today, but it Can't Hold Back the Tech Crash
American markets are having a very difficult time pushing higher of late. Entering the month of April, the Dow Jones Industrial Average very nearly broke through to a fresh all-time high, with its April 2 close of 16,573 points a hair's breadth away from the 16,576.66 points reached on the last trading day of 2013. However, the Dow and the broader S&P 500 have spent much of April roaring like a lamb -- both indices have been on a downward trend, with only brief upticks, since the almost-record at the start of the month:
Today's performance seems destined to continue that trend. Heading into lunchtime, the Dow and S&P fell from early pops into shallow declines. Both were hovering in the range of a 0.3% loss. However, they are avoiding the fate of the more speculative Nasdaq Composite , which continues to suffer a sharp reversal -- it's down 1% this morning -- after providing by far the strongest gains of the three major indices in 2013 and early 2014:
No Dow component is suffering any particularly glaring weakness -- none of its 30 components had fallen to a full 1% or greater loss before noon -- but the index's clear standout is Coca-Cola , which has by far the best performance on both the Dow and the S&P 500 today with a 3.8% gain.
The world's largest drink purveyor reported its first-quarter financial results this morning, and investors chose to overlook declining top and bottom lines to focus instead on the fact that revenue, which declined 4% year over year to $10.58 billion, was nonetheless better than the $10.55 billion Wall Street analysts had expected. Coke's adjusted earnings of $0.44 per share (generally accepted accounting principles earnings were $0.36 per share) fell in line with analyst expectations. Today's pop seems somewhat inexplicable in light of the fact that Coke's carbonated soft-drink volumes fell 2% last year, and especially considering that both Coke's revenue and EPS have been effectively flat for two years (these metrics have actually been in decline since the start of 2013):
Unfortunately, Coke's smaller share price -- it's 25th out of the Dow's 30 components in total weighting -- gives it a reduced ability to move the index. However, many of the Dow's triple-digit stocks are trading within a narrow enough band to prevent a steeper decline. About 190 of the S&P's 500 components were in positive territory this morning, but the index's decline is thus far being paced by Facebook , which is nearly counterweighting Coke's gain with its 2.9% drop. Investors don't seem too confident in the social network's latest effort to become a payments platform, which it should soon roll out now that it has regulatory clearance to set up shop in Ireland, a well-known tech-friendly tax haven. Yesterday's news that Google had scooped Facebook in the acquisition of a drone manufacturer doesn't seem to be well-received by the latter's investors, either, and Google itself has dropped about 1.6% this morning. Are investors starting to fear Big G's transformation into Skynet? If your name is Sarah Connor, you might want to avoid visiting Mountain View for a while.
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The article The Coca-Cola Company is Keeping the Dow Afloat Today, but it Can't Hold Back the Tech Crash originally appeared on Fool.com.Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Coca-Cola, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Coca-Cola, Facebook, Google (A shares), and Google (C shares) and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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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