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It's the peak of earnings season, and dozens of companies reported their quarterly results this week. Even though a few more companies will report on Friday, the eight components of the Dow Jones Industrials (DJINDICES: ^DJI ) scheduled to issue their earnings this week have all done so. Let's take a quick look at how these eight stocks fared.
1. McDonald's generally disappointed investors, as shares dropped sharply after the company reported a 2% rise in revenue that pushed earnings up 5%. Global comps rose just 1%, with outright declines in Europe and in the Asia/Pacific, Middle East, and African region. The strong dollar also weighed on results, and even worse, CEO Don Thompson suggested that the rest of 2013 could be challenging for the company. Shares dropped almost 3% on Monday following the report and remain near those levels.
2. United Technologies (NYSE: UTX ) saw an impressive 27% boost in earnings and a 16% rise in revenue in the second quarter, climbing largely as a result of its Goodrich acquisition. The company also got good news from other segments, as its Otis elevator division posted Chinese sales growth of 39% in the quarter. In general, though, aerospace appears to be United Tech's biggest growth opportunity, and the stock held onto most of the 3% gains it posted on Tuesday after the announcement.
3. Travelers provided what seemed like a confusing report to some investors, as an 85% rise in net income stemming from premium increases nevertheless led to sizable declines for the stock. The problem: As prices have risen, sales volumes have come under pressure, and that could affect results going forward. Moreover, big losses in bond-portfolio holdings led to a dramatic decline in book value. After dropping 4% on Tuesday after the report, shares have regained about 1%.
4. DuPont (NYSE: DD ) was confusing in the other direction, as a 1% drop in revenue and a 12% decline in earnings per share nevertheless didn't hurt the stock. Here, news is that DuPont is considering a sale or other strategic moves for its performance chemicals division as the company continues to maneuver toward emphasizing its higher-margin agricultural segment. Shares have gained about 1% so far on the week.
5. AT&T's earnings miss yesterday led to a drop of 1% for the stock, as investors were concerned about the extent to which the telecom giant had to discount smartphones in order to keep sales volumes up. Combined with ongoing worries about the level of subsidies in mobile-device sales, more positive results on new-customer counts and an overall revenue increase of 1.6% weren't enough to prevent slightly lower earnings from sending the stock modestly lower.
6. Caterpillar (NYSE: CAT ) posted much uglier numbers yesterday, with a 16% drop in revenue driving a much larger 43% decline in earnings per share. Cutting its full-year earnings guidance by $0.50 to $6.50 took its toll on the stock, and further weakness today brought Caterpillar's post-earnings share-price drop to 4%. As long as commodity prices remain subdued and China doesn't heat up with greater levels of construction activity, Caterpillar will likely remain down.
7. Boeing (NYSE: BA ) beat earnings and sales expectations, with net income jumping 13% on a 9% increase in revenue. Yet even though the company also raised its full-year revenue range upward, the stock has fallen by about 1% in the two days since the company announced earnings. In the long run, Boeing has huge potential for gains, but a big share-price rise already took good news for granted.
8. 3M reported record earnings this morning, with both earnings per share and sales growing about 3% over the year-ago quarter. The company reiterated its full-year 2013 projections and enjoyed its strongest growth in the Latin America and Canada divisions as well as in the health-care segment. 3M shares were up modestly today in a mixed market, and larger share repurchases could help bolster the stock into the future.
As you can see, earnings had a mixed impact on the Dow this week. In general, though, the results point to a guardedly optimistic view of the economy, albeit with pockets of weakness in certain industries that you should consider.
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