Morning Dow Report: Earnings Tug-Of-War Sends American Express Soaring; Intel, General Electric Fall

Morning Dow Report: Earnings Tug-Of-War Sends American Express Soaring; Intel, General Electric Fall

Jan 17, 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.

Until now, earnings season has generally had a clear pattern, with one day's news being predominantly positive while the next is dominated by negative developments. Today, though, the Dow Jones Industrials (DJINDICES:^DJI) provided a mix of bullish and bearish reports, and the net effect was a topsy-turvy morning for the average, which was up 48 points as of 11 a.m. EST. American Express (NYSE:AXP) powered the Dow higher, while Intel (NASDAQ:INTC) and General Electric (NYSE:GE) both weighed on the index with substantial declines.

American Express soared almost 6% as investors were pleased with the card company's holiday season. Adjusted earnings rose 15% from the year-ago quarter, and shareholders were willing to ignore a slight shortfall in favor of the optimistic attitude that CEO Ken Chenault gave. An 8% jump in spending among card members confirmed the ongoing trend that luxury shoppers have held up better throughout the economic recovery than less affluent shoppers, favoring AmEx's demographic. In addition, analysts at Susquehanna upgraded AmEx stock, citing factors including lower costs and strategic moves with its travel business as supporting future growth.

Intel dropped 3.5% after reporting a 3% increase in fourth-quarter revenue that sent earnings 6% higher, missing estimates by a penny per share. Even though PC sales held up reasonably well and areas including data-center products produced some substantial growth, investors focused on uninspiring guidance that left them uncertain about how well the company will be able to sustain its momentum in 2014. With the stock having jumped recently, giving back ground made sense in light of the less-than-perfect report.

General Electric fell 2.6% despite delivering a solid fourth-quarter report this morning. A sales gain of 3% and higher margins led to a 20% jump in earnings per share, with six of its seven segments showing revenue growth during the quarter. Oil and gas revenue climbed 17%, confirming the company's strategic vision in boosting its exposure to energy. Backlogs hit record levels, with gains in infrastructure orders pointing to a rebound in long-dormant areas of the economy. Yet again, after the big run in GE stock over the past year, it seems as though investors wanted even better results in order to justify further gains.

Today's stock market action shows how important it is to actually look at earnings reports rather than relying only on share-price moves in response to those reports. Studying only the stock can give you an incorrect impression of the fundamentals of a given business, leading you to make mistakes in your investing decisions.

Look for strong fundamental growth
Many think it's impossible to find solid growth stocks. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

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