Why the Death of the PC Isn't Holding Back the Dow

New record highs for the stock market have turned into a regular occurrence, so today's advance into uncharted territory isn't drawing nearly as much attention from investors as this year's first round of all-time highs did. Fairly benign data on jobless claims and a lack of troubling news from around the world generally left the stock market in bull mode, and by 10:55 a.m. EDT the Dow Jones Industrials (DJINDICES: ^DJI  ) climbed 59 points, or 0.4%, while the S&P 500 advanced by a similar percentage.

But beneath the Dow's calm advance, there's a battle going on. Yesterday the Dow's tech stocks advanced sharply, with investors questioning whether their beaten-down valuations had too harshly penalized big technology companies for their growth challenges. Yet this morning IDC reported that PC shipments fell by 14% -- the worst quarter ever in the nearly 20 years that IDC has given data for the industry. That sent Hewlett-Packard (NYSE: HPQ  ) down more than 6% and Intel (NASDAQ: INTC  ) falling 2.5%, as both companies continue to rely on PCs for a big portion of their business despite their attempts to diversify their exposure into more promising areas.

Moreover, big guns on Wall Street remain unconvinced that big tech is a big value. Microsoft (NASDAQ: MSFT  ) has fallen nearly 5% after Goldman Sachs downgraded the stock, giving it a rare sell rating. The analyst's report offered a familiar warning: Microsoft needs to move past its PC-based software and find new avenues for growth. Yet as the company has missed analyst projections of sales for its Surface tablet, its highest-profile attempt to get into the mobile market may not be enough to pull the stock up.

But tech is having no effect on the rest of the market, as earnings season continues to produce some strong results. Drugstore chain Rite Aid (NYSE: RAD  ) has soared nearly 20% on news that the company posted an annual profit last year -- its first gain after four consecutive years of losses. With earnings projections of $0.04 to $0.20 per share for the coming fiscal year, the company is optimistic about its chances to continue rebounding even as competing drugstore chains have seen better growth prospects and have far less debt to worry about. Still, if Rite Aid can keep improving, its beaten-down shares have plenty of room to run higher even after today's jump.

Today's reversal for Microsoft is just the latest disappointment that investors have had to deal with. To find out whether Microsoft is doomed to share the same fate as the PC, turn to the Fool's premium research report on the tech giant. Inside, you'll get the latest on the Surface tablet, the Windows 8 operating system, and other ideas the company has to escape the PC's downward spiral. You'll also get regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

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.

Compare Brokers

Fool Disclosure

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: 2358518, ~/Articles/ArticleHandler.aspx, 9/26/2016 1:58:52 PM

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...

Today's Market

updated Moments ago Sponsored by:
DOW 18,103.05 -158.40 -0.87%
S&P 500 2,146.73 -17.96 -0.83%
NASD 5,257.03 -48.72 -0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 1:43 PM
^DJI $18101.03 Down -160.42 -0.88%
HPQ $14.98 Down -0.11 -0.73%
HP CAPS Rating: ***
INTC $36.72 Down -0.48 -1.28%
Intel CAPS Rating: ****
MSFT $56.98 Down -0.45 -0.78%
Microsoft CAPS Rating: ****
RAD $8.05 Down -0.04 -0.49%
Rite Aid CAPS Rating: ****