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Rally Continues as Dow Hits New Record High

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 Dow Jones Industrial Average  (DJINDICES: ^DJI  ) on Friday was continuing the rally that started Wednesday when the Federal Reserve announced it would begin tapering its bond-buying program. It was up by 94 point, or 0.58%, as of 1 p.m. EST and setting new intraday record highs. This comes after the blue-chip index gained 292 points on Wednesday and a much milder 11 points yesterday.

Today's move came after the U.S. government release data indicating that the economy grew more than previously expected during the third quarter. Many economists had predicted gross domestic product growth to come in around 3.6% after the first two readings indicated a number at that level, but the final reported number was 4.1%.

Within the Dow, shares of Boeing (NYSE: BA  )  are up 1.8% to lead all index stocks. The move comes after the company reported this morning that it had won an order worth more than $7 billion to build 21 777X jets for Cathay Pacific Airways. The next-generation jet ios set to launch in 2020, but this deal and orders like it allow Boeing to predict revenue way out into the future and therefore to plan accordingly now. Shares of Boeing are up more than 82% year to date, which has been led by future orders such as this deal, so investors shouldn't expect this type of growth year in and year out. But, current shareholders should continue the ride. 

Outside the Dow we have a few big movers. Shares of the technology company Red Hat (NYSE: RHT  ) are flying higher by 18.37% after the company reported earnings after the closing bell yesterday. Revenue came in at $396.5 million, which beat the $383 million analysts were expecting, while earnings per share hit $0.42, again higher than the $0.35 Wall Street was looking for. But it is likely the forward guidance that is really exciting investors today. Management believes fourth-quarter revenue will fall within a range from $397 million-$400 million and earnings per share will land somewhere between $0.36 and $0.38. Additionally, full-year estimates for revenue fall in a range from $1.531 billion-$1.534 billion, higher than the previous projection, while EPS is believed to land around $1.46-$1.48. These stronger-than-expected quarterly and full-year estimates always make investors happy, as they show the company is continuing to grow at an even faster rate than previously thought.  

On the flip side is CarMax (NYSE: KMX  ) which is down 8.9% after reporting earnings this morning. The company posted net income of $0.47 per share, while analysts were looking for $0.48, but this quarter's results were higher than the $0.41 it posted in the same period last year. While the company's earnings statement wasn't terrible, the big decline is due to management's warning that it will look for subprime lenders as some of its lending partners began tightening their requirements during the quarter. This is a sign that the company may not only have a hard time selling cars, but also difficulty growing sales and earnings in the coming quarters.  

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DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
BA $131.74 Up +0.71 +0.54%
Boeing CAPS Rating: ****
KMX $53.35 Up +1.18 +2.26%
CarMax CAPS Rating: ****
RHT $80.83 Up +0.67 +0.84%
Red Hat CAPS Rating: ***