2 Industrial Giants Powering the Dow Toward Record Highs

At the outset of earnings season, investors were doubtful of the growth prospects for many of the biggest companies in the U.S. So far, though, the stock market has soared throughout this earnings season as many of those companies managed to outpace lowered expectations and make share price gains as a result. With so many members of the Dow Jones Industrials (DJINDICES: ^DJI  ) reporting their quarterly results this week, it's only natural for the market to put considerations about broader macroeconomic issues on the back burner and focus on individual company results. Given some good news this morning, the Dow is up a nominal 12 points as of 10:50 a.m. EDT, pushing forward to what could be a new all-time high if the index holds onto its current gains.

Driving the Dow higher are two industrial giants, United Technologies (NYSE: UTX  ) and DuPont (NYSE: DD  ) . For United Tech, a combination of continued strength in the aerospace industry and solid gains by its elevator segment sent the stock up 2.9%. The conglomerate also raised the lower end of its previous full-year earnings guidance, pointing to the success of its Goodrich acquisition in boosting sales of parts for large commercial engines. One analyst estimated that 65% of aircraft components now come from United Tech businesses, leaving its future firmly connected with currently rosy projections about aerospace demand over the next couple of decades.

DuPont, meanwhile, has gained 0.7% following its own quarterly report. Results from the quarter were mixed, with earnings falling from year-ago levels but narrowly beating estimates while revenue missed analysts' consensus figures. But the company said it's considering a sale of its "performance chemicals" segment, citing the exploration of "strategic alternatives" -- which might be a result of the recent investment from activist hedge-fund investor Nelson Peltz. The unit, which makes titanium dioxide pigment for paint and the popular Teflon coating, carries lower margins than DuPont's agricultural and energy-based businesses. Lately, potential M&A activity has spurred share price gains, and investors clearly expect DuPont's moves to unlock further value.

Finally, outside the Dow, earnings has helped drive smaller stocks higher as well. Coal stocks are climbing as Peabody Energy (NYSE: BTU  ) jumps 5.4% after reporting that its profit didn't drop quite so much as expected, with cost-cutting measures offsetting some of the negative impact of falling revenue. Peabody's results helped send the Market Vectors Coal ETF up more than 2%, but the industry has a long way to go before it can climb out from under the longer-term losses it has racked up in recent years.

The industrial sector is going through a huge transformation as investors prepare for the end of the "made in China" era. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.


Read/Post Comments (1) | 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.

  • Report this Comment On July 23, 2013, at 11:32 AM, funfundvierzig wrote:

    "[DuPont] Results from the quarter were mixed"...

    In commercial reality, results were downright shabby in a gradually improving global economy. Six out of eight business segments, including DuPont's much touted DuPont AG, showed declines in operating earnings year over year.

    To deflect attention from her lousy performance, DuPont Chieftess, Ellen Kullman and her PR cosmeticians burst forth with the unoriginal idea of shrinking the Company further: Spinning off or dumping DuPont Performance Chemicals, Teflon and TIO2, or a whopping 20% of annual revenues.

    Nothing to write home about with this DuPont earnings announcement. ...funfun..

Add your comment.

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: 2551492, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:39:32 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...


Advertisement