Why the Dow's Still Rising This Morning

After the big swings we've seen in the stock market over the past several days, investors took a short break at today's start before bidding shares slightly higher. Despite ongoing speculation that Greece may have to readopt its own currency and leave the eurozone, the market seemed to respond favorably to news that durable goods orders in the U.S. rose last month, as well as reports of another small drop in weekly jobless claims figures. All told, the Dow Jones Industrials (INDEX: ^DJI  ) were up about 32 points at around 10:45 a.m. EDT, while the broader market indexes posted similar gains.

The big mover in the Dow was Hewlett-Packard (NYSE: HPQ  ) , which soared almost 6% after reporting earnings last night. After Dell's disappointing earnings release, HP looked like it might be poised for similar trouble. But even though HP gave negative guidance for the current quarter, it boosted its full-year outlook. In addition, the company said it would cut 27,000 jobs over the next 2.5 years, leading to cost savings of $3 billion to $3.5 billion per year.

Coca-Cola (NYSE: KO  ) climbed more than 1%. The move up pushes Coke's valuation to almost 20 times trailing earnings, which is just the latest instance of the stock trading at multiples that could deter value investors. But as Fool analyst Austin Smith discussed yesterday, Coke's high margins and unmatched network of distribution have helped the company thrive and grow into a world economic superpower. The yield of 2.7% makes shareholders happy as well.

Finally, energy stocks ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) were both up about 0.5% on the day, as oil managed to rise back above the $90-per-barrel level. Yet although most investors tend to focus on Exxon and Chevron for their oil exposure, both companies have made moves in recent years to add natural gas exposure to their overall operations. With natural gas prices looking like they may have hit bottom, the two oil giants could get support from the gas market even if crude oil continues to languish.

Keep the faith
Even after big declines, the stock market's greatest trait is its resilience. The best stocks help bring the Dow and other market measures back up from declines. Get an example of such a stock from our much-sought-after special report, in which the Motley Fool's own chief investment officer gives his pick for The Motley Fool's Top Stock for 2012. It's all in the report, which you can read free by clicking here to discover the name of this stock.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Coca-Cola. Motley Fool newsletter services have recommended buying shares of Dell, Chevron, and 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 Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 24, 2012, at 9:53 PM, talexanderyu wrote:

    Just wondering everyone, if it went through, would the 2-for-1 split Coke's board is discussing in July turn it's valuation to 10 times trailing earnings?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1894263, ~/Articles/ArticleHandler.aspx, 9/24/2014 12:56:02 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement