Earnings Storm Leaves Dow Flat as UnitedHealth Group, IBM Plunge

Earnings season continued to have a big impact on the Dow, with crosscurrents leaving the stock market only modestly lower.

Apr 17, 2014 at 11:00AM

Earnings season for the Dow Jones Industrials (DJINDICES:^DJI) hit a climax Thursday, with six index components reporting quarterly results either Wednesday afternoon or this morning. With a mix of positive and negative news, the net impact on the stock market was minimal, with the Dow just above breakeven as of 11 a.m. EDT. Yet given the Dow's push higher earlier this week in yet another attempt to reach record levels, the declines for IBM (NYSE:IBM) and UnitedHealth Group (NYSE:UNH) were notable in holding back the average.

Ibm Logo

IBM fell more than 3.5% Thursday morning following its first-quarter report last night, with its large stock-price decline of about $7 per share creating 45 points' worth of downward pressure on the Dow Jones Industrials. IBM's revenue fell by 4% from year-ago levels, with adjusted earnings falling 15%. Strength in Europe was the only bright spot for the tech giant, with double-digit sales declines in emerging markets and the Asia-Pacific region weighing on overall revenue. Investors are clearly growing impatient with CEO Ginni Rometty's strategy to make the transition from hardware to software and services, even though the long-term boost to margins would be significant enough to outweigh even a permanent loss of revenue if that were to occur. Cloud-computing revenue rose 50%, but with the segment making up a small part of IBM's overall business, investors clearly discounted that growth in sending shares lower.

Meanwhile, UnitedHealth Group declined 3% as the health-insurance giant blamed the cost of the Affordable Care Act for a drop in first-quarter earnings. Even though UnitedHealth did better than investors had expected, net income dropped 8% from year-ago levels, and the insurer said that between reduced funding for Medicare Advantage, insurance taxes, and other requirements, Obamacare cost the company about $0.35 per share in additional expenses. UnitedHealth Group managed to earn some revenue from offering information technology services related to the government's health-insurance exchange Internet portals, but the big question for the company going forward is whether any boost in the number of customers it serves will help offset higher costs.

With the market closed on Friday, this morning's earnings announcement brought this week of earnings season to an end for the Dow. But with eight more Dow components set to announce their results next week, you can bet that investors will see more action in the blue-chip index before the first-quarter earnings season is over and done with.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now. Click here to get the full story in this eye-opening new report.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool owns shares of International Business Machines. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers