GE Drags on the Dow as Ford Keeps the Good News Coming

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Department of Commerce announced today that factory orders increased 1.7% in September to $490 billion. It also released figures that were delayed due to the government shutdown, showing that August orders fell 0.1%. September's increase was expected and was mostly due to a big increase in Boeing orders; excluding transportation, orders fell 0.2%. That economic data didn't do much to move the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , which is trading flat today, up a mere 16 points as of 3 p.m. EST. With the markets trading flat, here are some of the individual stocks making moves today.

General Electric (NYSE: GE  ) is one of the bigger losers in the Dow Jones Industrial average today, trading 0.5% lower. Recently, Money magazine named General Electric Capital Bank's online bank the best savings account in its "Best Banks 2013" list.

"We are focused on helping our customers reach their savings goals with better rates, better service and a convenient website," said Chris Favilla, U.S. deposits leader of GE Capital Bank, according to The Wall Street Journal. "We're excited to get this recognition from Money magazine as it acknowledges the value to today's investors of offering these straightforward benefits."

While GE Capital Bank seems a bit off from GE's typical businesses, GE Capital was once a big winner for the company, and its "AAA" credit rating gave it a low cost of borrowing. That rating was lowered in 2009, taking away the benefit and forcing General Electric to cut the bank down to only its essentials. While this means its contribution to profits will be lower, General Electric's bank is also exposed to much less risk and remains a positive for the company overall. As General Electric has simplified its bank operations, it has also spent the last couple of years focusing its efforts on building out its industrial businesses, and investors have been appreciative of the refocusing effort.

Outside of the Dow Jones Industrial Average, Ford (NYSE: F  ) is trading 0.4% higher as investors digest recent weeks' news of strong third-quarter results and solid October vehicle sales. 

With all the positive developments, it's easy for most investors to overlook the success of Ford Credit. Ford's finance arm takes on huge sums of loans at low interest rates and dishes them back out to consumers buying vehicles in Ford's showrooms. Ford Credit is a competitive advantage for the folks at the Blue Oval and continues to grow its profits as automotive sales and leasing increase.

Consider that in 2012 Ford Credit nearly offset the losses in Europe with its $1.7 billion in pretax profits. In fact, if you were to break down Ford's profitability by regions, Ford Credit would be the most profitable entity excluding only North America. In the third quarter Ford Credit brought in $427 million in pretax profit, which was more than South America and Asia-Pacific Africa combined -- and those regions continue to gain momentum. Most investors may overlook Ford's credit division, but it remains a very profitable part of Ford's story.

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Related Tickers

9/28/2016 5:27 PM
^DJI $18339.24 Up +110.94 +0.61%
F $12.09 Up +0.11 +0.92%
Ford CAPS Rating: ****
GE $29.90 Up +0.02 +0.07%
General Electric CAPS Rating: ****