Why General Electric and Goldman Sachs Will Move the Dow Tomorrow

On Wednesday, the Dow Jones Industrials (DJINDICES: ^DJI  ) managed to add to their big gains from Tuesday, gaining more than 160 points, and raising the possibility that a long-awaited record run for the average could come in the days to follow. With earnings having helped to pull the Dow higher, results tomorrow morning from General Electric (NYSE: GE  ) and Goldman Sachs (NYSE: GS  ) could help lift the Dow to unprecedented heights if the two companies give a positive read on the economy.

General Electric and Goldman Sachs are slated to issue their earnings releases before the market opens Thursday morning, with Goldman Sachs affirmatively saying that its press release will be available at around 7:30 a.m. EDT. Based on past experience, General Electric will likely come out with its release at around 6:30 a.m. EDT. General Electric will then follow up with its earnings webcast at 8:30 a.m. EDT, while Goldman Sachs will hold its conference call at 9:30 a.m. EDT.

Image: UpstateNYer.

General Electric's earnings will be a critical measure of the strength of the overall economy, because the breadth of the conglomerate's businesses gives hints on several different industries. In particular, General Electric's energy and aerospace divisions have been critical to the company's comeback since the financial crisis. GE moved beyond its former reliance on its GE Capital division and, instead, returned to the industrial focus that helped make it one of the most important companies of the 20th century. Yet, General Electric is also taking steps to ensure it doesn't fall behind the curve in terms of innovation, embracing cutting-edge technology like the Internet of Things to hold onto its leadership position and produce advances of its own to boost its fortunes in the long haul.

Meanwhile, Goldman Sachs is in a much different position, as the Wall Street giant struggles to hold onto its revenue and earnings, even as the industry goes through turbulent times. Because of increased regulation, as well as market pressures, especially in the bond market due to sharply higher interest rates compared to year-ago levels, Goldman Sachs could continue to see areas like bond underwriting and client trading perform worse than they did in years past. At the same time, though, the favorable stock market has led many companies to do initial public offerings of stock or consider mergers and acquisitions, and Goldman Sachs has done its best to capitalize on those opportunities. Where the balance ends up will determine whether Goldman proves successful in maintaining growth.

As for its influence on the Dow, Goldman Sachs is more likely to provoke a direct move, as its share price gives it six times greater weight in the Dow Jones Industrials than General Electric. But in terms of indirect impact, General Electric is more likely to move the Dow, as the information it gives will represent uncharted territory for investors. Regardless, if either General Electric or Goldman Sachs gives their shareholders any surprises, you can count on the Dow reacting in one direction or the other.

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