American Express Booms to Lead the Dow Past GE and Intel's Fall

American Express and Visa lead the Dow higher on a day when most of the index has fallen into the red.

Jan 17, 2014 at 2:30PM

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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Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends American Express, Intel, and Visa. The Motley Fool owns shares of General Electric Company, Intel, and Visa. 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.

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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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