Dow Keeps Up Its Winning Ways

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) started off slow on a poor eurozone GDP report today but finished strong on continuing optimism again, ending the day up 60 points, or 0.4%. The S&P 500, meanwhile, set a record high for the 11th day out of the past 13, which adds some perspective to the recent gravity-defying rally.

Economic reports were mixed on the day, as the Producer Price Index came in lower than expected in April, showing a drop of 0.7% versus predictions of -0.5%. The drop was the most in three years and shows that inflation still doesn't appear to be a concern despite the Federal Reserve's monthly injection of $85 billion into the economy. Core PPI, which eliminates the more volatile food and energy category, was up 0.1%.  Elsewhere, the Empire State manufacturing index showed a contraction for May when an expansion was expected; last month's industrial production numbers were slightly lower than expected; and the NAHB housing market index jumped three points from a month ago, in line with estimates.

Despite the poor GDP report in Europe, as the overall size of the eurozone's economy fell 0.2% instead of the expected 0.1% drop, European stocks actually finished up, as some investors believe evidence of the continuing recession will spur action from the European Central Bank. Later in the day, investors continued to bid up stocks as bullish sentiment took over after yesterday's positive remarks from hedge fund manager David Tepper and a study from the New York Fed saying stocks are cheap and will deliver "historically high excess returns" over the next five years.

Late tonight, Japan reported strong first-quarter GDP growth of 3.5%, which was better than expected and could be a sign that the world's No. 3 economy is waking up from a 20-year slumber, thanks to the policies of new Prime Minister Shinzo Abe, who came into office last December.

On the Dow today, Cisco Systems (NASDAQ: CSCO  ) jumped 8.8% after hours following an earnings beat in its quarterly report. The networking leader turned in a per-share profit of $0.51, ahead of projections of $0.49, while revenue grew 5% to $12.2 billion, slightly topping the analysts' view. Results were strong in the Americas and emerging markets, and CEO John Chambers said he saw "encouraging "signs from other parts of the world. For the current quarter, the company sees EPS of $0.50 to $0.52, in line with estimates, but better than some analysts had expected, as many of Cisco's peers had lowered guidance.

On the flip side, Hewlett-Packard (NYSE: HPQ  ) shares were down 2.6% after PC sales in Western Europe tumbled, falling 20.5% in the first quarter from a year ago to 12.5 million. HP saw its own portion drop 32% in the region, though it's still the market leader with a 19.5% share. The report is just the latest sign that the PC's demise has not been exaggerated and that HP will desperately need to find a foothold in mobile computing to be relevant in the next generation.

Once a high-flying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the low down on the routing juggernaut in The Motley Fool's premium report. Click here now to get started.


Read/Post Comments (0) | Recommend This Article (1)

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.

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: 2434636, ~/Articles/ArticleHandler.aspx, 9/19/2014 6:04:34 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