Tech Leads the Dow's Triple-Digit Jump

Ben Bernanke's spreading his magic around the Dow Jones Industrial Average (DJINDICES: ^DJI  ) today. The index has taken another triple-digit leap on quantitative-easing hopes. The Federal Reserve chairman didn't say much about the end of economic stimulus yesterday, nor did the central bank's release of minutes indicate a firm plan to taper easing anytime soon. That's been enough to fuel momentum on the markets: The Dow has taken off by more than 170 points as of 2:25 p.m. EDT, and nearly every stock on the index is in the green. Let's check out the big stories of the day.

Disney paces the Dow's gains
Disney
's (NYSE: DIS  ) taking advantage of the stimulus-fueled day of gains in a big way, with shares up 2.7% so far to rank among the Dow's top stocks. Investors are looking past the company's big-budget sales flop The Lone Ranger, which has been destroyed by competing films at the box office so far. It's safe to say the film won't be earning back its reported $250 million budget after grossing less than $30 million domestically in its opening weekend.

For Disney investors, however, the movie's failure is a reminder of how the big picture matters more than ever for this entertainment goliath. While Lone Ranger is one to forget, Disney is still the company that owns untouchable brands such as Marvel and Star Wars -- the latter of which has industry analysts projecting that Star Wars: Episode VII could rake in more than $1 billion at the box office when it arrives in 2015. With ESPN and a host of other cash cows in its portfolio, Disney can endure a big-budget flop much more easily than other studios.

Microsoft's (NASDAQ: MSFT  ) also shaking up the Dow today -- but the stock's 2.6% rise owes to the company's own internal shake-up. CEO Steve Ballmer is reorganizing the company into fewer business units and moving management around in order to shift toward hardware and Internet offerings. Microsoft is putting emphasis on areas such as cloud computing while stressing sales of devices such as the new Xbox One entertainment console and Surface tablet.

It's an organizational switch for Microsoft, but it's a change the company needs after certain products hit the market to little or muted fanfare -- particularly such ho-hum offerings as the Surface tablet and the Windows 8 operating system. The Xbox One's own PR backlash was the latest example of how Microsoft's old methods haven't translated well to a new era dominated by mobile. While Microsoft is still a money-making machine on Wall Street, investors will need to watch how Ballmer's changes enhance the company's ability to adapt to a changing industry.

Hewlett-Packard (NYSE: HPQ  ) is adding to tech's gains with a 1.8% rise, but the company's victory today is a strange one. Rival PC maker Lenovo leaped past HP as the top PC-maker in the world today -- normally not a cause for celebration from investors, and HP leadership certainly didn't take it as a good thing. However, HP desperately needs to pivot away from the PC market, and while the firm is still reliant on the industry for sales, other high-growth areas will chart HP's future. It's unusual for investors to cheer on bad news, but for HP, more motivation to turn away from the PC market is good.

HP's shift away from PC sales will help the company in the long term, but is it right for investors now? The best investing approach is to choose great companies and stick with them for years and decades. 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 (1) | Recommend This Article (0)

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.

  • Report this Comment On July 11, 2013, at 4:00 PM, dilfarb wrote:

    Lenovo's profit margin in the PC biz is miserable and getting worse. HP, with superior margins and other lines of business with even higher margins is happy to let them dig their own grave.

Add your comment.

DocumentId: 2532790, ~/Articles/ArticleHandler.aspx, 4/18/2014 2:24:38 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