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Boeing's Dreamliner Problems Continue, Dragging on the Dow

Despite a weak labor market and slow economic growth, consumers are more confident than they've been in six years. The Thomson Reuters/University of Michigan index of consumer confidence for July was released today, and it rose to 85.1 from 84.1 in June -- the highest reading since before the financial crisis. 

Unemployment is clearly a drag, but home prices are rising, stocks are up, and those who have jobs are finally getting raises again. That helps confidence, and because consumers account for about 70% of economic activity in the U.S., it bodes well for future economic growth. Of course, the market didn't see it that way today: The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 0.16%, while the S&P 500 (SNPINDEX: ^GSPC  ) has dropped 0.12%.

There aren't a lot of big movers, but one to watch is Boeing (NYSE: BA  ) , which has dropped 1.1% today. Qatar Airways grounded one of the aerospace manufacturer's 787 Dreamliners due to "minor" technical issues -- the latest in a long line of glitches for the aircraft. The plane has been out of service since Sunday, although detailed issues have not been made public.  

If this were an isolated incident, it wouldn't be a big deal, but the company has had a series of electrical problems including burning batteries on two 787s in January and a fire on an Ethiopian Airlines plane that sat parked in London. Just last week Japan's ANA Holdings reported damaged wiring on two 787 locator beacons, which have been reported as the cause of an earlier 787 fire in London.

Boeing's stock is up 46% over the past year, and most of that gain has occurred since the Dreamliner was grounded and the company had to repair the aircraft's batteries. There's a lot of optimism priced in right now, and with problems popping up nearly every week, investors have to be getting a little bit nervous about all of the company's speedbumps.

If it can get the 787 Dreamliner right, Boeing should be a big beneficiary of global growth, and that's why a recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," identified the company as a potential winner. Find out which other companies could take off when the global economy gains steam. Click here to read the full report!

Read/Post Comments (3) | Recommend This Article (1)

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 26, 2013, at 4:41 PM, plange01 wrote:


  • Report this Comment On July 26, 2013, at 7:32 PM, AngelTread wrote:

    I expected the Boeing 787 Dreamliner woes to continue.

    There are just too many heat / electrical / fire issues on board this aircraft. They are apparently unrelated, but I'm not convinced.

    Could there be a common thread to these problems? Humidity aboard the aircraft? Unusual vibrations from the carbon composite frame? Electrical panel problems? Shoddy installation? We don't know the answer. However, the occurrences are regular enough to be a major worry.

  • Report this Comment On July 27, 2013, at 11:17 AM, m199413 wrote:

    The 787 is an amazing aircraft. It is having the normal teething problems that usually plague new planes. Remember the L1011 and the bad cargo doors that led to crashes and groundings? The Airbus Super Jumbo with cracked wings and other problems? In a couple of years this will all be history and Boeing will just continue to go up. Me? Retired Boeing builder.

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