Dow Soars 150 on Crimean Calm; 3M, IBM Jump as Coke and McDonald's Lag

Markets breathed a sigh of relief that the referendum in Crimea avoided violence, but some stocks are performing better than others. Find out why here.

Mar 17, 2014 at 11:00AM

Throughout last week, investors had expected the worst from the weekend's referendum in Crimea on whether the Ukrainian region should secede in favor of joining Russia. Although the result of the referendum was predictably one-sided, with 97% of those voting siding with Russia, the fact that worst-case scenarios involving armed conflict didn't occur was enough to lift the Dow Jones Industrials (DJINDICES:^DJI) by more than 150 points as of 11 a.m. EDT. Yet although all 30 Dow stocks posted gains in the first hour of trading, some stocks fared much better than others. IBM (NYSE:IBM) and 3M (NYSE:MMM) were among the top performers, while Coca-Cola (NYSE:KO) and McDonald's (NYSE:MCD) managed only small gains.

Haves and have-nots
The key to understanding the disparities in performance among Dow components is that in a relief rally, investors gravitate toward the stocks that will benefit the most from improving conditions. Throughout much of last week, defensive consumer stocks held up reasonably well in the downturn that sent the Dow lower all five days, while higher-growth stocks took hits because of their larger exposure to the threat of a market plunge. With investors now concluding that some of the danger has passed, it's natural for more aggressive stocks to bounce back further.

Moreover, some signs have appeared that IBM and 3M could finally provide the faster growth that shareholders want to see. IBM this morning released a study indicating that advanced analytics will play a much larger role in the marketing efforts of major corporations worldwide, supporting IBM's big-data initiatives as especially useful for the high-performing chief marketing officers that Big Blue refers to as "digital pacesetters." 3M has also ramped up the pace of its innovation lately, with new announcements ranging from patents on nickel-manganese-cobalt cathode technology for lithium-ion batteries to water-filtration systems pointing the way toward potential growth areas for the manufacturing conglomerate.

Conversely, even a peaceful resolution in Ukraine won't solve most of Coca-Cola's and McDonald's problems. Much more important for both companies is what's happening with China's economy at the moment, with recent reports pointing to a more dramatic slowdown in economic growth than most investors anticipated. Both companies have had trouble finding growth on the domestic front and have looked increasingly at foreign markets to take up the slack. Yet with key emerging markets falling short, both McDonald's and Coca-Cola could continue to see trouble ahead.

For the Dow overall, expect a relief rally to fade as Western nations take action after denouncing the Crimean vote as meaningless and incendiary. Without a broader resolution to the key issue of whether Russian expansionism will be allowed to occur, markets will continue to see uncertainty on the geopolitical front.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends 3M, Coca-Cola, and McDonald's. The Motley Fool owns shares of Coca-Cola, International Business Machines, and McDonald's and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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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