IBM Rains on the Dow's Parade

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 77 points, or 0.51%, as of 12:50 p.m. EDT, bringing it within firing range of its all-time closing high of 15,409. The S&P 500 and the Nasdaq are also making gains this afternoon, up 0.72% and 0.58%, respectively. There's been little economic news today, which is a good sign that investors are buying stocks based on individual company results, rather than macro events that often have disproportionate effects on stocks.

The Dow has even managed to overcome the considerable drag of its heaviest-weighted component, IBM (NYSE: IBM  ) , whose shares have lost 1.9% of their value after Goldman Sachs downgraded the stock and lowered its price target this morning. The analyst responsible for the move was Bill Shope, who said in a client note that IBM will experience more pressure in emerging markets, which IBM relies upon for about $17 billion in revenue as part of its five-year growth plan. The stock's rating was changed from "Buy" to "Neutral," while the price target was cut from $220 per share to $200 per share.  

Alcoa (NYSE: AA  ) , which officially kicked off earnings season yesterday, is down 0.4% today. While the earnings announcement was by no means terrible, it also wasn't great. The company posted a loss of $119 million during the second quarter compared with a loss of just $2 million in the same quarter of last year. However, last quarter's loss included $195 million in restructuring costs, so when one-time special items are backed out, Alcoa posted earnings of $76 million, or $0.07 per share. Revenue, on the other hand, declined by 2% to $5.85 billion. The lower revenue and profit are likely the result of weak aluminum prices over the past few months; the metal lost 8% of its value on the London Metal Exchange during the quarter. 

Shares of Verizon (NYSE: VZ  ) have declined by 0.4% this afternoon on little news. But over the past few months, the company has found itself constantly making news headlines. Verizon's potential buyout of Vodafone's stake in the companies' joint venture, its fight with AT&T for dominance of the American consumer, and Sprint's ongoing buyout saga have clouded Verizon's long-term outlook. But Verizon did recently finish its rollout of its 4G LTE network, which now covers more than 99% of those who once had Verizon's 3G service. Today's move lower is unexplainable, and investors shouldn't be too concerned with it, as the company is financially strong and continues to lead telecommunications companies into the next generation of service.

More foolish insight
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "
3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


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: 2528495, ~/Articles/ArticleHandler.aspx, 4/16/2014 9:49:30 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...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement