Coke Throws Cold Water on the Dow's Rally

After a surprising burst over the last week that sent shares to record highs once again, Wall Street fell back slightly today as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed down 32 points or 0.2%. Coca-Cola (NYSE: KO  ) disappointed in its earnings report, as the beverage giant dropped 1.9%, the blue chips' worst performer today. The secular decline in U.S. soda consumption seems to be finally catching up with the world's most valuable brand, as unadjusted profits fell 4%. In addition to weak U.S. sales, the company blamed bad weather, including cold and wet conditions in the U.S. and flooding in Europe, for the poor quarter. Soda volume fell by 4% in North America, but the company still finished with an adjusted earnings per share of $0.63, in line with estimates. Revenue was down 2.5% to $12.75 billion, missing estimates of $12.95 billion.

On the economic slate, the June consumer price index was up 0.5%, above expectations, but the core rate grew just 0.2%, which excludes the volatile food and energy categories, indicating that inflation is under control. Last month's figures for industrial production and capacity utilization came in essentially in line with estimates, and the National Association of Home Builders' Housing Market Index jumped to 57, ahead of expectations of 51, indicating that the housing market remains strong despite rising interest rates.

Elsewhere on the Dow, Johnson & Johnson (NYSE: JNJ  ) also reported earnings, finishing unchanged as a result. The health-care giant said adjusted earnings per share came in at $1.48, well ahead of expectations of $1.39, and it also beat revenue estimates as sales increased 8.5% to $17.88 billion, topping projections at $17.72 billion. The increase in sales and income was primarily driven by its $19.7 billion acquisition a year ago of Synthes, a surgical equipment maker. Despite beating estimates, shares fell back after a strong start, as the company expects slower growth in the second half of the year, where it's facing increasing competition for medical equipment and prescription drugs.

Finally, Disney (NYSE: DIS  ) shares were off for the second day in a row, down 1.4% today, for a combined drop of 3% this week. There was no specific news out on the media conglomerate today, but the company continues to reel from the fallout from The Lone Ranger, as analysts estimated it would take a $190 million loss on the flop. The company also recently settled an antitrust lawsuit on behalf of its Lucasfilm and Pixar divisions for conspiring not to hire employees from rival companies. Terms of the agreement were not disclosed. Lastly, Disney's cash cow ESPN may be facing a real threat for the first time, when Fox Sports 1 launches this August. At the very least, Fox's entry into the field should drive up prices for broadcasting rights.

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