The 2 Companies That Led Today's Rally

On an otherwise quiet day in terms of economic news, stocks are nevertheless up considerably thanks to better-than-expected earnings reports from consumer darlings Nike (NYSE: NKE  ) and Tiffany (NYSE: TIF  ) . With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is higher by 83 points, or 0.58%.

Shares of Nike are surging 11.6% after the company reported that its fiscal third-quarter earnings beat expectations. Analysts were particularly impressed by its performance in China. According to Bloomberg News, orders for the Nike brand in the world's second-largest economy increased last quarter after contracting during the two preceding time periods.

In addition, the sporting-goods company's gross margin increased 30 basis points to 44.2%. "Nike is firing on all cylinders," an analyst quoted by Bloomberg said. "They've been talking about, for several years now, expecting gross margins to eventually turn. And now it looks like that has played out."

Shares of Tiffany & Co. are similarly up following the company's fourth-quarter earnings release. While its bottom-line figure rose by only 0.7% on a year-over-year basis, it was weighed down by "headquarters relocation costs," noted The Wall Street Journal. The market nevertheless responded favorably after the company reiterated its full-year guidance, even though it's forecasting an underwhelming first quarter. According to Michael J. Kowalski, Tiffany's chairman and chief executive officer:

These quarterly sales results were consistent with the holiday trends we had issued in early January. While financial results in fiscal 2012 were disappointing due to lower-than-expected sales growth and pressures on gross margin, we continued to maintain a longer-term focus on strengthening global awareness of the Tiffany & Co. brand and on further developing compelling product offerings.

Best- and worst-performing Dow stocks
In terms of Dow stocks, the index's best-performing component today is Hewlett-Packard (NYSE: HPQ  ) , which is up 2.9% in afternoon trading. As my colleague Dan Dzombak noted this morning, the ailing technology company held its annual shareholders meeting earlier this week. Among other issues on the agenda was a highly contested vote on whether three of the company's directors would be re-elected to the board after proxy firm Institutional Shareholder Services recommended they be removed. While all three "squeaked by" with favorable votes of 54% to 58%, as Dan observed, "Typically, votes with less than a 70% majority are looked upon unfavorably."

Alternatively, the worst-performing stock on the Dow this afternoon is UnitedHealth Group (NYSE: UNH  ) , down by 1.1% at the time of writing. Scanning the news, there doesn't appear to be a specific catalyst to explain the weakness. Despite this, according to fellow Fool Matt Thalman, a "massive amount of uncertainty" continues to plague health care stocks as the industry adapts to Obamacare and changes to proposed payments under Medicare. It's for this reason that Matt implores new investors to "stay away from the company until its future is clearer."

Want to learn more about UnitedHealth Group?
When President Obama was re-elected, shares of UnitedHealth and other health insurers fell immediately. Is Obamacare a death knell for health insurers, or is the market missing out on some of the opportunities the law presents? In this brand-new premium report on UnitedHealth, The Motley Fool takes a long-term view, honing in on prospects for UnitedHealth in a post-Obamacare world. So don't miss out -- simply click here now to claim your copy today.


Read/Post Comments (0) | Recommend This Article (2)

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.

Be the first one to comment on this article.

DocumentId: 2327900, ~/Articles/ArticleHandler.aspx, 4/20/2014 12:17:47 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