Why Microsoft and Procter & Gamble Will Move the Dow Tomorrow

Microsoft reports earnings after the bell today, while Procter & Gamble will release its results Friday morning. Find out how both could have a big impact on the Dow tomorrow.

Jan 23, 2014 at 12:30PM

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.

Even as worries about Chinese economic prospects are hitting the Dow Jones Industrials (DJINDICES:^DJI) hard today, earnings season continues to play a major role in the stock market's overall direction. With Microsoft (NASDAQ:MSFT) and Procter & Gamble (NYSE:PG) set to report their earnings within the next 24 hours, investors need to be ready for important readings on the technology and consumer-goods sectors both in the U.S. and around the world.

Microsoft will release its earnings results shortly after the market closes this afternoon at 4 p.m. EST, with a conference call scheduled for 5:30 p.m. EST to discuss the results. Procter & Gamble has typically issued earnings press releases at about 7 a.m. EST, and the company will have an open webcast of its earnings discussion at 8:30 a.m. EST Friday. 

Image sources: Microsoft, Procter & Gamble.

For Microsoft earnings, investors will be watching a number of key areas affecting the tech giant. First and foremost, shareholders want a more definitive time frame on when Microsoft's purchase of Nokia's (NYSE:NOK) handset division will be complete, as the acquisition will play a key role in the company's overall vision for its smartphone and tablet strategy. At the same time, though, investors will want to see specifics about the holiday season to help them identify trends in demand for traditional computers, mobile devices, and video game consoles. Moreover, with the company's leadership in transition, Microsoft needs to reassure investors that its succession plan is still viable.

Meanwhile, investors expect Procter & Gamble earnings to remain somewhat under pressure, with a slight drop in earnings per share and only minimal growth in revenue. Returning CEO A.G. Lafley has done a good job of restructuring P&G's operations to emphasize the most important aspects of its overall corporate strategy, including an expansion of divisions focusing on global opportunities. But cost-cutting is also an important part of boosting profits, particularly with the strong U.S. dollar hurting earnings results recently due to adverse currency impacts. P&G needs to deliver impressive results in order to justify what has become a fairly rich valuation, as nervous investors gravitate toward defensive stocks in an attempt to prevent major losses in a future stock market downturn.

One thing to keep in mind is that despite the big-name presence of both P&G and Microsoft, neither stock has a high enough share price to have the outsized impact on the Dow that we've seen after other earnings reports recently. Nevertheless, investors should look at the results for their value in predicting the fortunes not just of those individual companies but of their entire industries as well, and that could move the Dow tomorrow.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Procter & Gamble. The Motley Fool owns shares of Microsoft. 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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