AT&T and Poor Economic Releases Weigh on the Dow Jones Today

It's a slow day for the Dow, but there are some interesting stories that matter for the long term.

Apr 23, 2014 at 1:30PM

AT&T (NYSE:T) reported earnings after yesterday's market close that missed analyst expectations. This, combined with poor economic releases in the U.S. and China, is weighing on the Dow Jones Industrial Average (DJINDICES:^DJI) today. As of 1:30 p.m. EDT the Dow is flat. The S&P 500 (SNPINDEX:^GSPC) is also near breakeven, down just two points to 1,877.

There were two economic releases in the U.S. today and one in China.





U.S. Markit flash PMI




New home sales




HSBC China flash manufacturing PMI




The U.S. flash PMI was little changed from March and still indicates that U.S. economic activity is growing slowly. The HSBC China flash manufacturing PMI rose in April but slightly missed expectations of 48.4. The slight rise to 48.3 indicates that the economy is continuing to slow, but at a slower rate than in March. Last week the Chinese government reported that GDP grew at a 7.4% seasonally adjusted annual rate in the first quarter, beating analyst expectations of 7.3% but missing the Communist party's target of 7.5% growth. China is going through a credit and property bubble, which is weighing on the economy as more resources are diverted to pay for the massive amount of debt the country has built up. The major question is how the Chinese economy will work off this debt and what effects this will have on the rest of the world. The Chinese people are confident that the party can engineer a soft landing, but economies are impossible to control, and efforts by the party look more like a delaying of the inevitable than a solution.

Meanwhile, the new-home sales report showed that new-home sales dropped 14.5% month over month to a seasonally adjusted annual rate of 384,000 -- well below analyst expectations of 450,000.

US New Single Family Houses Sold Chart

US New Single Family Houses Sold data by YCharts.

The report may not be as bad as it looks at face value, however; sales and construction were constrained over the past few months by the harsh winter. Still, some economists argue that this report reflects a bigger problem. Last week economists from Fannie Mae and Freddie Mac both lowered their expectations for the housing market for 2014. This report gives credence to their views and shows that the U.S. is likely in for another year of slow growth.

Also weighing on the Dow Jones today is AT&T, which is down 3.3% to $35.08 after reporting earnings yesterday. The company reported earnings per share of $0.71 excluding one-time items, beating analyst expectations of $0.70. Revenue of $32.5 billion beat expectations of $32.4 billion. The company added just over 1 million new subscribers.

AT&T has been in a mini pricing war with T-Mobile, which was the first to allow its customers to separate their monthly device payments from their service payments. The advantage to this is that if you bring your own phone, or pay off the cost of your phone, you only have to pay for the phone service and data you use, rather than still paying one bill that includes the high cost of phone subsidies. AT&T started its own program, called Next, to compete with T-Mobile's offer. AT&T reported that 40% of its customers who upgraded phones in the quarter used its new Next plan, which was better than analysts expected.

The reason the stock is down today is that the company raised its guidance less than investors had expected. For 2014, AT&T now estimates it will show revenue growth of 4%, but it left unchanged its guidance for 5% EPS growth and free cash flow of $11 billion. At that level, AT&T trades at a free-cash-flow yield of 6% -- a high price for a company that could well be facing a pricing war by year-end, challenging those cash flows.

3 stocks to own for the rest of your life
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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

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, 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

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