Coca-Cola, Merck Lead the Way for the Dow's Gain

Home Depot sinks to the bottom of the index on a wobbly day for stocks around the market.

May 13, 2014 at 2:30PM
Daily Fool

The market is mixed in afternoon trading, with the Nasdaq dropping into the red. The Dow Jones Industrial Average (DJINDICES:^DJI) hasn't exactly put on a show for investors, rising about 25 points as of 2:30 p.m. EDT even as most of member stocks are in the green. Home Depot (NYSE:HD) stock has fallen to the bottom of the Dow, while Merck (NYSE:MRK) and Coca-Cola (NYSE:KO) have helped the index stay above water so far. Let's catch up on what you need to know.

Retail slows down in April
The Department of Commerce announced this morning that retail spending gained only 0.1% in April. With the winter in the rearview mirror, economists expect spending and consumer activity to pick up as 2014 continues, in line with the economy's rise. While March's sizable spending rise likely is to blame for some of April's falloff -- the Commerce Department revised March's spending up to a 1.5% increase, the biggest one-month gain in years -- it's worth keeping an eye on Internet retail spending in the coming months after it fell 0.9% in April. Internet spending has been a big driver of consumption lately, and it's key that consumers continue to drive this industry higher as many top retailers focus on the Web for sales.

Count Home Depot among those company, as the home-improvement retailer aims to open two new online distribution centers in 2014. The stock could use a boost, as it's hung flat over the past six months and won't be aided by today's 1.4% drop. A greater online presence could help: Home Depot only recorded roughly 3.5% of its total revenue online in 2013, and the company's move to halt most physical-store growth should help in driving up profits. Of course, the biggest boon for this company is the housing market: If housing can pick up to strong and consistent growth over the coming few years, Home Depot's stock won't say flat for long.


Source: Wikimedia Commons

Coca-Cola is not having any trouble at all on the market today, as the fizzy stock's jumped 0.8% to rank among the Dow's leaders. Coke today increased its stake to 16% in Keurig Green Mountain (NASDAQ:GMCR), emerging as the coffee maker's largest stakeholder. Shares of the do-it-yourself coffee company have jumped 9.5% as a result of the announcement. It's a growth-focused move for Coca-Cola, which has struggled to keep growth charging higher as of late, particularly in developed economies such as the U.S. The buy's also good for Keurig shareholders, in that Coca-Cola's optimism and belief in this company's growth potential should keep the beverage giant focused on expanding its niche with this company going forward. Despite the stock's run-up, Keurig is looking forward to a bright future with Coca-Cola behind it.

Finally, Big Pharma's Merck is up nearly 1% alongside the Dow leaders. Merck's been active lately after selling its consumer health business to Bayer for $14.2 billion in an effort to focus on growth and core businesses. Apparently the company's not done with its deals. Merck today signed off on a deal to sell its eye-care product rights in Asian markets to Japan's Santen Pharmaceutical in a deal that will earn Merck $600 million right away. The company is holding on to its ophthalmologic assets in Latin America, the Middle East, and other markets, but Merck is clearly slimming down its presence in the area after earlier selling off its U.S. eye-care products. Breakups and buyouts have been the name of the game in Big Pharma this year so far, so don't be surprised if Merck and other big names continue to cash in on big deals in the coming months.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Home Depot, and Keurig Green Mountain. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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