American Express Pops While Intel Drops

Strong AmEx numbers help lift rival Visa.

Jan 17, 2014 at 1:00PM

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.

Major indexes are mixed following the release of preliminary University of Michigan Consumer Sentiment Index figures today that suggest U.S. consumers were not feeling great about the economy this month. The index fell short of the expected 83.5 reading, instead hitting only 80.4. As of 1 p.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) is up 60 points, or 0.37%, but the S&P 500 and the Nasdaq are down 0.08% and 0.18% respectively.  

One reason the Dow is moving higher today is because of American Express (NYSE:AXP), which has risen nearly 5% at this time. The credit card company reported fourth-quarter earnings that were rather good on all standards, despite missing analysts' earnings predictions. The company increased income from $637 million in the year-ago quarter to $1.3 billion this year. Additionally, return on equity rose from 23.1% in the last quarter of 2012 to 27.8% at the end of 2013.

The strong results from American Express have boosted fellow Dow component and credit card company, Visa (NYSE:V). Visa shareholders can now have confidence that its next earnings report will also be strong. Visa is up more than 2% at this time. And with Visa being the Dow's largest component, a 2% move higher makes a big difference and can wipe out lighter-weighted companies' moves. 

For example, shares of Intel (NASDAQ:INTC) are off by 3.1% today. But since Intel's stock price is only $25.67, making it the second lightest stock within the Dow at only 1.04% of the index's weight, that drop means little compared to Visa's 8.66% of the Dow.  

Intel reported quarterly earnings yesterday that weren't bad, as sales hit $13.83 billion and gross margin came in at 62%. The company had previously forecast these figures at $13.7 billion and 61%. Intel, though, beat Wall Street estimates on revenue but fell short on earnings. The biggest problem was that expectations for the company had risen dramatically over the past few months; investors were expecting a lot from the chip manufacturer and they didn't get what they wanted. Today's move is rather irrational, in my opinion, and investors should hold tight as things don't look that bad for Intel.  

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Fool contributor Matt Thalman owns shares of Intel. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513

The Motley Fool recommends American Express, Intel, and Visa. The Motley Fool owns shares of 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.

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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