Dow Falls Triple-Digits On Visa's Plunge, But Investors Like General Electric's Deal

The Dow Jones Industrials (DJINDICES: ^DJI  )  had lost 125 points as of 10:45 a.m. EDT Friday as this week's wave of earnings releases continued to whipsaw the stock market. Yet about half of that Dow loss came from a single stock -- Visa (NYSE: V  ) -- and that obscured better news from a number of other blue-chip companies with less influence over the average, including General Electric (NYSE: GE  ) .

Visa's 4.5% drop sent its share price down more than $9.50, making the credit card giant responsible for more than 60 points of the Dow's decline. Visa actually posted fairly strong growth in its latest earnings results last night, with net income rising 26% on a 7% gain in net operating revenue during Visa's fiscal second quarter despite some currency-related issues that held back growth. Payment volume grew by 12% on a constant-dollar basis, and total processed transactions jumped by 11%. But investors focused on Visa CEO Charlie Scharf's comments that the company expects growth struggles to continue in the current quarter. Moreover, full-year fiscal 2014 guidance for net revenue growth of 10% to 11% left growth-hungry investors wanting more. Given the challenges the payment processor will have competing not just with other card-network giants but also new electronic-payment systems using different business models, investors aren't certain that Visa can sustain sufficiently fast growth rates to satisfy them.

Source: GE.

Helping to cut the Dow Jones Industrials' losses minimally was General Electric, which gained more than 1%. Numerous reports have said General Electric is looking to buy the energy business of French industrial giant Alstom, which builds nuclear-powered steam turbines. The deal would leave Alstom with its transportation division, which builds high-speed trains in France. Many analysts argue that political pressure from the French government could prevent a General Electric buyout, but sealing the deal would further bolster GE's efforts to focus on various niches of the energy business. Given General Electric's already substantial presence in electrical infrastructure, the deal makes sense as the conglomerate seeks to grow its nonfinancial businesses to become an even larger part of its overall operations.

Because Visa has a share price almost eight times higher than General Electric's, GE's news hasn't helped the price-weighted Dow Jones Industrials very much. Given the Dow's idiosyncrasies, it's important to look whenever the Dow falls substantially to see if a single stock like Visa is largely to blame.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.


Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 25, 2014, at 12:05 PM, Bottomlesspit wrote:

    Shows how dumb the basis of calculating the Dow index is. Visa has an 8-fold impact over GE despite having close on 40% of it's capitalisation. In other words misrepresents movements 20x.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2930302, ~/Articles/ArticleHandler.aspx, 9/30/2014 4:26:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASD 4,493.39 -12.46 -0.28%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2014 4:11 PM
^DJI $17042.90 Down -28.32 -0.17%
DOW JONES INDUSTRI… CAPS Rating: No stars
GE $25.62 Up +0.20 +0.79%
General Electric C… CAPS Rating: ****
V $213.37 Up +2.44 +1.16%
Visa CAPS Rating: ****

Advertisement