The Dow Jumps as Financials Outperform

American Express and Visa are dual-handedly pulling the Dow higher.

Jan 17, 2014 at 1:30PM

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.

The Dow Jones Industrial Average (DJINDICES:^DJI) is up 44 points  to 16,461 at 1:30 p.m EST, after better than expected earnings from American Express (NYSE:AXP) helped lift top Dow stock Visa (NYSE:V). The S&P 500 (SNPINDEX:^GSPC) was down four points to 1,841.

This was been a big week for financial stocks, with Bank of America, Goldman Sachs, and Citigroup all issuing quarterly earnings reports. The financial earnings parade continued with today's Dow leader AmEx, which is up 4.65% to $91.86.

The credit card company yesterday announced that fourth-quarter profits more than doubled to $1.21 per share from $0.56 per share a year ago. That was actually below analyst expectations of earnings of $1.27 per share. Revenue also came in less than expected at $8.5 billion versus expectations of $8.6 billion.

Despite the lower than expected earnings, two analyst upgrades pushed the stock higher today. Susquehanna raised American Express from neutral to positive and raised its price target on the stock from $90 to $107. Buckingham raised its opinion from neutral to buy and its price target from $90 to $104.

American Express trades at a 33% lower price-to-earnings ratio than rivals Visa and MasterCard, as the company takes on more risk from its customers. Visa and MasterCard are payment processors and leave the credit risk to their banking partners. That said, American Express' good news is pulling up Visa -- 3.1% at last check -- on hopes that its earnings will also be positive. Visa is the largest Dow stock in terms of price -- $228.58 per share. As the Dow is structured as a price-weighted index, companies with higher stock prices move it more. 

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Dan Dzombak has no position in any stocks mentioned. The Motley Fool recommends American Express and Visa. The Motley Fool owns shares of 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.

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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. 

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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." 

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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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