Evening Dow Report: Why Today's Drop Could Get Worse Tomorrow

Even as the Dow gave up ground today, after-the-bell reports from Intel and American Express could send the average down further tomorrow. Find out the details here.

Jan 16, 2014 at 9:01PM

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 Industrials (DJINDICES:^DJI) proved unable to sustain positive momentum from two strong sessions earlier in the week, as concerns about earnings reports led to a pullback of almost 65 points for the average. Yet, looking at the prospects for Friday, reports after the bell from Intel (NASDAQ:INTC) and American Express (NYSE:AXP) could lead investors to become even more nervous about the young earnings season's progress so far.


Source: Intel.

Intel fell 0.5% during Thursday's regular session, but the stock plunged another 3% in the first hour of after-hours trading after the chipmaker posted mixed performance in its fourth-quarter report. Intel's revenue growth of 3% was slightly above the middle of the range that it had previously provided as guidance, with sales declines in the contracting PC client group division staying relatively subdued at just 4%. Yet, earnings came in $0.01 per share short of expectations, and even what CEO Brian Krzanich called "signs of stabilization in the PC segment" proved insufficient to give investors confidence in Intel's immediate future. The stock's response is another example of how shareholders have been disappointed by anything short of substantial outperformance so far this quarter.

American Express also dropped half a percent in the regular session, but its response to earnings was more positive, as shares rose 0.25% in the first hour of after-hours trading. The card company said that earnings more than doubled, with diluted earnings per share coming in at $1.21 per share. Even though that figure was $0.04 below expectations, the shortfall was largely due to legal costs related to its settlement of merchant litigation last month. AmEx saw cardmember spending levels gain 8% in a strong holiday season for the company and, in the long run, how its customers spend will be the biggest indicator of whether AmEx can grow as fast as its card-network rivals.

Finally, Johnson & Johnson (NYSE:JNJ) was little changed Thursday, falling 0.2% after announcing that Carlyle Group (NASDAQ:CG) had made a firm offer to buy its Ortho diagnostics unit for $4.15 billion. J&J had been looking at strategic options for the diagnostics business for some time, and while the company has until the end of March to accept the offer, J&J seems likely to accept the deal based on a statement from CEO Alex Gorsky. The move solves a problem for J&J, with Ortho having provided slower growth than J&J has seen in some better-performing segments. It makes it even more important for J&J's pharmaceutical division to provide the growth engine for the overall company going forward.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express, Intel, and Johnson & Johnson. The Motley Fool owns shares of Intel and 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.

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