Morning Dow Report: Will a Telecom Price War Hurt AT&T and Verizon?

The Dow Jones Industrials bounced back from yesterday's declines, with Boeing and Johnson & Johnson helping to lift the average. But telecoms fell in a sign of what could be a painful price war for the industry.

Jan 3, 2014 at 11:00AM

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.

On Friday morning, the Dow Jones Industrials (DJINDICES:^DJI) showed some signs of life after a disappointing performance on the first trading day of the new year. As of 11 a.m. EST, the Dow was up 56 points, recovering a decent chunk of the 135 points it lost yesterday. With bad weather affecting much of the East, traders expected a relatively quiet day. Johnson & Johnson (NYSE:JNJ) and Boeing (NYSE:BA) posted gains, but for AT&T (NYSE:T) and Verizon (NYSE:VZ), troubling signs of an imminent price war weighed on stocks.

In particular, AT&T fell 0.3% after announcing a plan to offer T-Mobile customers as much as $450 in credits to switch to AT&T. The move is just the latest in a series of attacks between the two carriers, and it reveals just how much AT&T is concerned about competition from its smaller rivals in the wireless space. Yet Verizon actually fell more sharply, trading down more than 1% as investors consider the impact on the industry at large. Now that T-Mobile and Sprint have strengthened their competitive resolve, both AT&T and Verizon will likely have to make more profit-trimming moves in order to preserve their market share, and that bodes ill for shareholders going forward.

Boeing gained 0.9% as the aerospace giant waits for its machinists' union to vote today on a key contract that could decide whether its lucrative 777X production program will remain in the Seattle area or move to one of more than 20 states that have expressed interest in housing a 777X facility. Some union members still oppose Boeing's attempted shift away from traditional pension plans, but the pressure to keep 777X production in Washington state could push some workers to vote for the deal. Resolving the labor dispute would be another key move in Boeing's efforts to keep new-plane production on schedule in light of huge order backlogs.

Johnson & Johnson rose about 1.1%. Despite a fairly high valuation, investors have been pleased with J&J's success in its pharmaceutical division, which looks like it could remain a key area of future growth for the health-products giant. One big question for J&J's future growth will be whether it can avoid adverse events like product recalls in 2014. But given the demand for defensive stocks as more investors start to worry about the ability of the bull market to go another year without a major downturn, Johnson & Johnson could remain a popular pick throughout 2014.

Get smart and get rich
Johnson & Johnson is just one example of the popularity of dividend stocks. The reason why so many investors love dividend stocks is simple: they can make you rich. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information