Jobs Send the Dow Soaring Past 17,000, But Why Are Johnson & Johnson and Coca-Cola Falling?

Strength in U.S. employment helped send the Dow to a new milestone, but not all of the index's 30 components rose.

Jul 3, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) reached a new milestone Thursday, soaring above the 17,000 mark as investors celebrated an unexpectedly large boost in U.S. nonfarm payrolls and a sizable drop in the unemployment rate. With the economy creating 288,000 jobs last month and unemployment falling to 6.1%, investors got the message that the recovery is still on course, and a rise in bond yields showed expectations that the Federal Reserve will acknowledge that fact by raising interest rates in the not-too-distant future. Yet even though the Dow was up 67 points as of 11 a.m. EDT, several index components lost ground, with Johnson & Johnson (NYSE:JNJ) and Coca-Cola (NYSE:KO) among the worst performers this morning.

Source: Johnson & Johnson.

Johnson & Johnson fell 0.7% as investors weighed the potential impact from further liability connected to hip implants from the company's DePuy subsidiary. Yesterday afternoon, Johnson & Johnson settled a dispute with the state of Oregon over alleged deceptive marketing claims related to the implants, which were recalled after patients complained that the new metal-on-metal design caused unintended negative consequences. The settlement includes a $4 million payment to the state government, and although that's inconsequential compared to the roughly $2.5 billion that Johnson & Johnson expects to pay to resolve patient lawsuits, the threat of other state and federal government investigations could lead to further payments and hurt J&J's reputation among consumers and medical professionals.


Coca-Cola declined by almost half a percent. Putting the move into context, the beverage giant has recently climbed to its best levels in a year, as investors start to feel more confident that Coca-Cola has a long-term strategy to get itself back on a higher-growth trajectory. In particular, Coca-Cola's developing relationship with Keurig Green Mountain has the potential to push both companies into new directions, with the possibility of making Coke products at home through Keurig's planned cold-beverage system unlocking the door to new profit opportunities and changing Coca-Cola's entire bottling-based business model. With today's job gains pointing to better opportunities for growth in other industries, Coca-Cola is likely seeing investors become less defensive and shift money out of the beverage stock into higher-growth plays.

With the Dow Jones Industrials having reached 17,000, the next question for investors is whether the bull market has even more legs to advance further. As lofty as valuations have become, the blue-chip index appears to have the momentum to keep rising as long as the economy keeps growing at a reasonable pace.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson and 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.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

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."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

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

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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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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