Johnson & Johnson Keeps the Dow's Momentum on Track as Microsoft's Stock Slips

China's manufacturing sector can't dig out of contraction despite an upbeat and expectations-toppin result that kicked off a cautiously optimistic day for the Dow.

May 22, 2014 at 2:30PM
Daily Fool

After a short drop to start the day, stocks have rebounded across the market, with the Dow Jones Industrial Average (DJINDICES:^DJI) up 28 as of 2:30 p.m. EDT. The blue-chip index's 30 member stocks are split almost roughly evenly between gainers and losers. Johnson & Johnson (NYSE:JNJ) is on the rise after optimistic news from the company's medical device division, while Microsoft's (NASDAQ:MSFT) stock hasn't been able to get anything going today. Let's catch up on what you need to know.

China still looking for a turnaround

China Flag

Source: Wikimedia Commons.

Things got started on an upbeat note in China today,  as the HSBC/Markit's flash purchasing managers' index came in above expectations. The mark, which measures the activity in the country's manufacturing sector, jumped by 1.6 percentage points in May's preliminary reading from April's final mark. However, the score of 49.7 is still below the level of 50 that indicates neither contraction nor expansion in manufacturing. Employment continues to fall within manufacturing in China, with that mark contracting for the 13th-straight month in May, a trend that won't help the world's second-largest economy escape its slowing economic growth.

Economists project China's GDP to grow by 7.3% this year. That's still far above nearly all other major economies worldwide, but it's a big slide for a country that previously enjoyed double-digit annual GDP growth. Exports also fell in today's flash PMI, an especially concerning trend for Chinese manufacturers given the country's reliance on sending goods abroad for economic growth. While the rise in China's domestic consumption through its growing middle class and urban population will help buoy the economy's momentum overall, Chinese manufacturers and stocks still have a bumpy road ahead to escape the doldrums that have plagued this market over the past year.

Things are looking much better for health-care giant and Dow component Johnson & Johnson. The stock's up around 0.3% so far after management announced the company plans to file for regulatory approval of more than 30 new medical device and diagnostic products through 2016. Johnson & Johnson is particularly turning an eye toward China, hoping to capitalize on that growing middle class and the company's top position in the nation's diabetes device market. J&J has done a good job making the most of its operations in the Asia-Pacific sphere, generating sales growth of 4.5% in the region in its most recent quarter, a mark that topped revenue gains in the U.S.

While currency impacts have slammed the company's foreign operations, Johnson & Johnson's medical device unit has performed far better internationally -- where it saw 4.6% year-over-year growth for the quarter at a constant currency basis -- than it has in the American market, which has dragged down device revenue. Targeting emerging markets such as China and Russia should help keep this division on pace for the long term and please investors looking for more from Johnson & Johnson besides the company's surging pharmaceutical division.

Elsewhere on the Dow today, Microsoft's stock has lost 0.5% so far. The company is looking to appeal to consumers with its upcoming Surface Pro 3 tablet, a device Microsoft hopes can carve out a market that will draw in both tablet and laptop users. However, Microsoft's hardware business hasn't been quite the success the company has hoped for: The Surface line still is trailing behind leaders such as Apple's iPad tablets, and while Microsoft is aiming to compete against Apple's own MacBook Air laptops with the Surface Pro 3, the company will need to hope that tablet users embrace the device amid the PC market's ongoing slide. There's an opportunity here for Microsoft to open up a new market and gain some ground for its struggling hardware line, but a cautious hand serves investors best with this move.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Apple and Johnson & Johnson. The Motley Fool owns shares of Apple, Johnson & Johnson, and Microsoft. 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