The Dow Seeks Record No. 12 as Intel, Microsoft Diverge

The Dow Jones Industrials (DJINDICES: ^DJI  ) climbed into all-time high territory Tuesday morning, as promising readings on new-home sales and solid consumer confidence numbers helped restore investors' confidence in the stock market's long bull run. As of 11 a.m. EDT, the Dow was up 24 points, pushing beyond last Friday's all-time high and putting the average on track for its 12th record of 2014. Interestingly, Intel (NASDAQ: INTC  )  was gaining even as tech peer Microsoft (NASDAQ: MSFT  )  gave up ground this morning.

Source: Intel.

Intel's 1.3% rise put it at the top of the list of Dow gainers in early trading, continuing the recent surge that has sent the semiconductor chip giant to its best levels in a decade. As much scrutiny as Intel has received for its sluggishness in capturing opportunities in the fast-growing mobile chip market, the reason for the stock's jump likely has to do with its legacy PC business. Earnings results from various players in the tech sector have indicated that PC demand has picked up substantially over the past quarter, resulting in stronger sales of everything from memory chips to peripherals. Intel might well owe much of that success to Microsoft, as the software company's decision to end technical support for its Windows XP operating system led many users to update their computers rather than trying to navigate an operating-system upgrade on old equipment.

Yet despite apparent PC strength, Microsoft fell more than half a percent this morning. Microsoft has clearly turned its attention almost exclusively to the mobile world, with today's release of the Windows Phone 8.1 update and its much-anticipated Cortana virtual assistant feature. At the same time, Microsoft is releasing its low-cost Nokia-branded X2 smartphone, adding another weapon in its arsenal of Android-based phones and demonstrating Microsoft's willingness to promote products on multiple platforms. The key to the company's approach is pre-loading the hardware it sells with as many of its software and cloud-based products as possible, making it easiest for users to stick with the tools Microsoft provides rather than replacing them with alternatives. Yet Microsoft's rivals are pursuing similar strategies, seeking to establish the dominance of their respective ecosystems and capture as much business from each customer as they possibly can.

Economic strength will help lift the Dow Jones Industrials, but for the Dow's tech giants, the key is finding the right strategy to take advantage of demand for PCs, mobile devices, and other emerging technologies. With so much growth potential but so many players in the industry, Intel and Microsoft will have to keep working hard to make the most of their opportunities.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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9/3/2015 11:15 AM
^DJI $16518.24 Up +166.86 +1.02%
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Intel CAPS Rating: ****
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Microsoft CAPS Rating: ***