Why IBM and Visa Led the Dow Higher Last Week

By now, just about everyone knows that the Dow Jones Industrials (DJINDICES: ^DJI  ) jumped above the 17,000 mark for the first time Thursday, capping a strong week for the stock market. Even with a day off for the Independence Day holiday, the Dow managed to climb 216 points, or about 1.25%, with three straight record closes to finish the week. As second-quarter earnings season begins, investors are optimistic that the strength we've seen in the U.S. economy will translate to much better results for individual companies than they saw in during a tough winter. Even though more than two dozen Dow component stocks rose last week, the two top performers in the Dow were IBM (NYSE: IBM  ) and Visa (NYSE: V  ) , standing well ahead of their peers.

IBM Price Chart

Price data by YCharts

Source: IBM.

IBM climbed almost 4% as the evolving tech giant made some important product releases and also got good news from a key industry report. Analysts at Gartner rated IBM as the leader in security-analysis services, leading its peers both in terms of its ability to execute with useful tools for clients as well as with respect to the completeness of its vision in providing big-picture solutions to the most common challenges its customers face. The news validates the approach that IBM has taken recently as it focuses on mastering areas that have the potential for high-margin sales to enterprise customers. Moreover, multiple efforts in the cloud-computing space helped lift IBM's visibility among shareholders, with new social software products enabling easier collaboration among users. IBM still faces its challenges, especially in emerging markets, but shareholders are hopeful that after a long period of underperformance, the tech giant is back in the game.

Visa gained 3.5%. The credit card network company tends to perform well whenever positive economic conditions suggest that consumers might spend more in the future, and part of this week's gains likely stem from Visa's expected revenue jump from more unemployed Americans getting new jobs and going back to work. Interestingly, though, much of Visa's long-term potential could come not from successfully beating down its competitors but rather from working with them to make credit card and debit-card technology more secure and easier to use. As electronic payments go beyond cards and allow non-traditional companies from outside the typical financial-institution universe to play an increasingly important role in the evolution of the industry, Visa and its card-network peers will keep having to work hard to remain the favored way that people spend money.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.


Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3018506, ~/Articles/ArticleHandler.aspx, 9/22/2014 6:39:32 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement