Tech Lifts the Dow 91 Points, But Nike, Goldman Don't Share Consumers' Confidence

The Dow posted solid gains Tuesday, but crosscurrents still affected individual stocks differently. Get the details here.

Mar 25, 2014 at 9:01PM

The Dow Jones Industrials (DJINDICES:^DJI) finished Tuesday with a solid gain of 91 points, following an up-and-down roller-coaster path during the day following some conflicting data about the health of the U.S. economy. A fall in new-home sales of 3.3% prompted concerns about whether housing's contribution to the economic recovery might be waning, but rising consumer confidence figures won the day for the Dow. Leading the way higher were tech giants Cisco (NASDAQ:CSCO) and IBM (NYSE:IBM), even as athletic stalwart Nike (NYSE:NKE) and Wall Street titan Goldman Sachs (NYSE:GS) posted substantial declines on the day.

Cisco's jump of 3.5% came on the heels of its latest efforts to try to bolster its flagging growth, this time by making a substantial investment into cloud computing. Yesterday's announcement to spend $1 billion in creating Cisco Cloud Services is a direct move against rivals that include both IBM and, with IBM having said just a couple months ago that it would also make a billion-dollar investment into cloud computing. With the potential to bundle a broader cloud-computing presence with value-added services like its online-collaboration business, Cisco certainly has potential in the cloud space. Yet as much as $1 billion might sound like, Cisco's commitment could prove woefully insufficient to stem its sliding revenue recently. IBM's similar 3.5% jump followed its own cloud-computing collaboration to provide location-based services with Pitney Bowes.

Ibm Cloud

Source: IBM.

Yet the longer-term question for both IBM and Cisco to answer is whether they'll be able to restore revenue growth to bolster their future prospects. Both companies are too large for any but the most ambitious initiatives to make a material difference to results, and both face huge competition both from each other as well as from numerous other big players in the industry. Valuations for the two stocks are modest, but only if you believe that they can continue to grow earnings, and that's a bold assessment given the challenges both IBM and Cisco face.

Meanwhile, on the losing side, both Nike and Goldman fell around 1.5%. Both companies have to face the rising difficulties outside the U.S. market, with Nike investors pointing to sluggish growth in China as well as the negative impact from falling currencies in the emerging markets. For Goldman, news of ex-director Rajat Gupta's loss of his appeal of his conspiracy and securities fraud conviction reawakened memories of more troubled times, but the Wall Street firm is also vulnerable to changing currents in emerging markets that could jeopardize one of its largest growth opportunities.

It's important for investors to remember that the Dow depends not only on U.S. economic growth but on the health of the global economy. Without strength from all quarters, the Dow's five-year-old bull market could be in jeopardy in the long run.

Are you ready for this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap pure play and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends, Cisco Systems, Goldman Sachs, and Nike and owns shares of, IBM, and Nike. Try any of our Foolish newsletter services free for 30 days. 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.

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