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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.
Earnings have made a big impact on the Dow Jones Industrial Average (DJINDICES: ^DJI ) today, with three of the index's big blue-chip stocks moving significantly on quarterly results. The Dow's up around 72 points as of 2:30 p.m. EST; while most of its member stocks are in the red, huge days from American Express (NYSE: AXP ) and fellow credit card giant Visa (NYSE: V ) are overcoming the laggards. Meanwhile, General Electric (NYSE: GE ) and Intel (NASDAQ: INTC ) , both fresh off earnings reports, are keeping the Dow from taking full advantage of the credit card stocks' big gains. Let's catch up on what you need to know
Consumer sentiment down, credit cards up
The economy kicked things off with a downbeat spot for credit card companies and other consumer giants this morning, as the University of Michigan and Thomson Reuters survey of consumer sentiment fell from a reading of 82.5 in December to 80.4 in January. Economists had expected a rise in consumer sentiment, but with gas prices climbing and last month's poor new jobs report, many consumers appear cautious about the direction of the economy overall.
That didn't seem to hurt American Express, which was up 4.5% after yesterday reporting fourth-quarter earnings that soared from a year earlier. American Express' earnings per share more than doubled year over year to $1.21, with EPS minus one-time legal costs matching analyst expectations. Revenue jumped 5% as card spending picked up by 8%, a result that's helped to push Visa more than 4% higher on Friday as well.
Despite the shakiness in jobs, consumer sentiment's still high, even with today's fall for the month. If the economy continues to pick up momentum, expect Visa, American Express, and other consumer card giants to reap the benefits of that shift.
Intel, meanwhile, has seen its stock sink 3.7% to the bottom of the Dow after it posted mixed quarterly earnings. The company's revenue climbed above analyst projections, but a 6.4% surge in net earnings wasn't enough to please Wall Street's expectations. The PC industry's precipitous decline over the past year has hindered Intel's progress lately, but CEO Brian Krzanich noted that signs of stability are beginning to show in the market. What really took down Intel's stock today was the company's outlook ahead: Intel projects revenue to flatten in its current fiscal year even as analysts expect revenue growth by around 1.2%; the company also sees gross margin to fall to about 60% for the year.
General Electric's stock has gone nowhere but down on the day after its own quarterly report, falling 2.7% so far to trail only Intel on the index. While the company's 3% revenue gain spearheaded an earnings beat on both the top and bottom lines for the quarter, investors walked away with a downbeat feeling. Wall Street had expected more out of the company's profit margin, and despite a 24% revenue gain in its oil and natural gas business and a 20% jump in its surging aviation unit, GE's stock still hasn't capitalized. Nonetheless, this conglomerate still performed well for the quarter, despite Wall Street's pessimism -- there's no need for smart, long-term investors to fret.
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