The Dow Ends Down Just 70 Points as Verizon, Intel Defy the Drop

Strength among Dow components helped limit the market's losses.

Jul 10, 2014 at 9:04PM
Longview

If you didn't know anything about what happened with the stock market earlier today, then the more than 70-point drop in the Dow Jones Industrials (DJINDICES:^DJI) might come as somewhat of a disappointment after yesterday's impressive gains. Yet, today's move in the Dow was arguably even more encouraging, as the market recovered from losses of as much as 180 points after investors realized that, even with some bad news from Europe, the progress that the global economy has made in healing during the past five years is unlikely to be undone overnight. Helping to boost investors' spirits were Verizon (NYSE:VZ) and Intel (NASDAQ:INTC), both of which defied the Dow's losses to post sizable gains Thursday.

Vz

Verizon gained 1.5% after releasing favorable comments about its just-ended second quarter at a media-finance conference. CEO Lowell McAdam told attendees that he expects Verizon's wireless division to announce that the company had more than 1.4 million net retail postpaid additions during the quarter, with favorable churn rates, and solid growth both in smartphones and in tablets. Moreover, Verizon said its margins would remain consistent with past quarters, addressing investor concerns that pricing pressures from Verizon's rivals might lead to a price war that would, in turn, reduce margins. With healthy results even from its traditional wireline business, Verizon appears to be firing on all cylinders and sustaining its lead in the increasingly competitive wireless-network industry.

Intc Chip

Source: Intel.

Intel rose 1.2%. The chip giant has already boosted its own guidance for the quarter, pointing to surprising strength in PC sales in bolstering the company's sales and net income. Yet, as investors prepare for the company to report its earnings next week, Intel needs to demonstrate that its longer-term initiatives to gain market share in the key smartphone and tablet space will finally start to eat into the competitive advantage that early moving rivals gained in the mobile arena. Moreover, an interesting new threat to Intel could emerge in the years to come, as rivals start to look at chips that don't use traditional silicon as its basic raw material. Still, with its in-house foundries, Intel could well play an important role in industry R&D, as scientists aim at finding ways to make chips even smaller.

Investors need to remember that, sometimes, even a losing day can be a sign of encouragement for the stock market. When the Dow is able to cut its losses after alarming news, it shows just how strong the underlying fundamentals of the U.S. economy are, and that could help support the Dow and the rest of the stock market well into the future.

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Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Intel. 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.

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