Earnings season is on us, and we are seeing a continued chasm between corporate profits and broad economic recovery. Initial jobless claims were 6% higher than expected, existing home sales 6% lower, and Mid-Atlantic factory activity showed a third straight monthly decline.
Yet, the markets are somewhat flat, as investors, once worried about several companies cutting forecasts in the face of the slowing economy, have seen recent earnings releases paint a better picture.
That said, let's see how the three major indexes are faring and take a closer look at several stocks making headlines.
|
Index
|
Gain/Loss
|
Gain/Loss %
|
Intraday Value
|
| Dow Jones Industrial Average (INDEX: ^DJI ) |
17.71 |
0.14% |
12,926.41 |
| Nasdaq |
22.45 |
0.76% |
2,964.05 |
| S&P 500 |
1.40 |
0.10% |
1,374.18 |
Source: Yahoo! Finance as of 2:15 p.m.
The Nasdaq is showing considerably greater gains than the Dow and S&P 500, while oil continues its rebound, adding more than 3%, bringing the price to $92.81 per barrel.
The Nasdaq continues to rebound after a couple of tough weeks. Hardware makers rose in a big way yesterday, and today investors are anxiously waiting for Google's (Nasdaq: GOOG ) and Microsoft's (Nasdaq: MSFT ) releases after the market closes tonight. Both companies will be releasing their own tablets to take on Apple's (Nasdaq: AAPL ) ubiquitous iPad, but in the near term both face headwinds. Investors should expect slower Windows sales in advance of the new Windows 8 operating system and general softness in PC sales. Meanwhile, the slowdown in the global economy has affected online ad spending, which could negatively impact Google's revenue per click.
Verizon (NYSE: VZ ) is down 3%, despite a solid quarter that saw 12% growth in the bottom line. Despite adding fewer customers than a year ago, the trend to smartphones and high monthly bills has increased profitability per customer to record highs. Expect some margin pressure when the iPhone 5 comes out due to Verizon subsidizing those sales, but that will come with a boost in new subscribers and long-term contracts that work in the telecom's favor.
Verizon has an impressive 4.4% yield, but the Dow is loaded with companies with solid dividend payouts and highly sustainable business models built for the long haul. The stocks highlighted in The Motley Fool's new special free report, "The 3 Dow Stocks Dividend Investors Need," all have an X factor that makes them stand out from their illustrious Dow peers and could make a nice complement to riskier growth stocks. Download it now -- for free.
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