The Dow Goes Record-Hunting as AT&T, Disney Soar

The Dow Jones Industrial Average is not far from a potential second record high of 2014, with a combination of M&A and earnings news helping pull it higher.

May 8, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) jumped out to a solid 51-point gain as of 11 a.m. EDT, with favorable unemployment-claims data helping to reassure investors about the health of the U.S. economy. The blue-chip index is just below its record closing level of 16,580, and finishing trading above that level today would give the Dow its second all-time high close of 2014. AT&T (NYSE:T) and Disney (NYSE:DIS) are doing their best to help the average set that new record, with impressive gains that show how merger activity and earnings results are helping drive many stocks higher.


AT&T climbed nearly 2% as developments on the acquisition front continue to accelerate. AT&T is reportedly in discussions to purchase the satellite television company DIRECTV. The massive deal would be a natural answer to consolidation in the cable television industry and give AT&T growth opportunities to tap DIRECTV's video customer base for cross-selling opportunities in broadband Internet and phone service. It's far from certain that regulators would approve the deal, as it would have anti-competitive impact in some local markets. Nevertheless, AT&T's search for growth is a good strategy in light of the aggressive moves its competitors have made lately. At the same time, the telecom giant is also reportedly considering the sale of its Muve music subscription business, which could help the company cash in on what has turned out to be a lucrative operation and prevent Muve from distracting AT&T from its core business.


Source: Disney.

Disney, meanwhile, gained almost 2% after its fiscal second-quarter earnings report last night. Overall revenue climbed by 10%, sending net income up 27%. In particular, studio revenue soared 35% due largely to the success of the animated hit Frozen, and Disney is optimistic about prospects for future releases in its Marvel and Star Wars universes. Yet Disney's other segments also posted solid growth, with operating income from its media networks climbing 15% and theme-park operating income posting a 19% gain, despite the negative impact of having Easter fall outside the March quarter this year. Disney appears to be firing on all cylinders, and today's gain reflects shareholder support for the company's future prospects.

The rise in the Dow Jones Industrials over the past couple of days shows just how resilient the bull market has been. That won't last forever, but for today, it looks like the Dow could well reach a new record high once again.

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Dan Caplinger owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. 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.

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