Why Johnson & Johnson, Verizon, and Travelers Will Move the Dow Next Week

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.

After a week that has seen many of the most influential names in the Dow Jones Industrials (DJINDICES: ^DJI  ) issue their fourth-quarter earnings reports, investors will enjoy a three-day weekend with the Martin Luther King Jr. Day holiday Monday. But once the holiday is over, a new rush of earnings will start up again, with Johnson & Johnson (NYSE: JNJ  ) , Verizon (NYSE: VZ  ) , and Travelers (NYSE: TRV  ) all reporting before Tuesday's trading begins.

Johnson & Johnson traditionally issues its initial informational release at about 7:45 a.m. EST; it has has a conference call scheduled for 8:30 a.m. EST Tuesday. Verizon has historically released its earnings around 7:30 a.m. EST and also has an 8:30 a.m. EST conference call scheduled, while Travelers will wait until 9 a.m. EST for its conference call after likely making its materials available close to 7 a.m. EST, based on past experience.


Image sources: Johnson & Johnson, Verizon Wireless, Travelers.

With the Johnson & Johnson earnings report, the key factor will be whether the health care giant's pharmaceutical division continues to drive its growth higher. The recent announcement of a potential sale of its Ortho diagnostics unit is only the latest sign of J&J's efforts to concentrate its business in the higher-growth segments. It will be important for the company to demonstrate an ability to keep competing strongly in the pharma space in order to validate this overall strategy. Investors will also want to look at the consumer products segment for news on efforts to shore up quality control issues there.

The latest report on Verizon earnings comes at an interesting time for the company, with Big Red this week winning a huge court victory overturning net neutrality that could have a big impact on its business in the long run. At the same time, Verizon is still finalizing the complete takeover of its Verizon Wireless business, doubling down on its bet for U.S. growth. With competitors working harder to challenge Verizon's dominance of the wireless space, the company will have to show that moves like its purchase of content-delivery network EdgeCast Networks can lead to stronger overall earnings.

Travelers earnings are likely to come in very strong again this quarter, with a general lack of high-profile catastrophic events helping to support profits for the insurance giant. Stability in the bond market should avoid a repeat of the summer's problems for Travelers, which included a drop in book value as a result of falling bond prices. Still, Travelers needs to compete more effectively in key areas including personal insurance lines, where its rivals have done a better job of taking advantage of growth opportunities in the past.

Coming off the holiday, any of these three reports could lead to big moves for the Dow on Tuesday. Given today's oscillations in light of mixed results from reporting companies, a clearer picture from Travelers, Verizon, and Johnson & Johnson could help investors figure out the broader direction for the Dow not just next week but throughout the early part of 2014.

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