Why Visa Is Rallying the Dow Jones Today

Visa is pulling the Dow higher today. Here's why.

Jul 18, 2014 at 1:31PM

Visa (NYSE:V) is leading the Dow Jones Industrial Average (DJINDICES:^DJI) higher as the financial, health care, and technology sectors all rally today. As of 1:20 p.m. EDT the Dow was up 88 points to 17,065. The S&P 500 (SNPINDEX:^GSPC) was up 15 points to 1,973.


Source: Finviz.com.

There was one U.S. economic release today. The Conference Board reported that its Leading Economic Index rose 0.3% in June. This is a good sign for U.S. economic growth over the next few months.


Source: Conference Board.

The biggest contributor to the Leading Economic Index, by a factor of two, continues to be the difference between long-term and short-term federal interest rates. This is a large contributor, as banks can borrow from the Federal Reserve at the short-term interest rate and buy bonds from the Fed to make a relatively risk-free profit in the short term. So long as the Federal Reserve continues to keep the federal funds rate near zero, this will continue to be the case, though this could change before investors expect. Dan Caplinger, The Motley Fool's director of investment planning, took and in-depth look at June's Leading Economic Index. It should be noted that the index doesn't give us new information; it's only a compilation of economic data.

Yesterday, the stock market experienced its worst loss in three months following the downing of Malaysia Airlines flight MH17 in Ukraine. The stock market has currently recovered half of yesterday's losses, because it doesn't seem there will be much fallout from the attack, as it appears to have been the work of Ukrainian separatists and not Russia. Visa was one of the hardest-hit Dow stocks yesterday, as it has a lot to lose in Russia: The country accounts for 3%-4% of Visa's revenue.

Visa and other payment processors do well as consumers buy more, collecting a small fee with every transaction. With the Leading Economic Index indicating continued growth for the next six months, it's no surprise that Visa is higher today. As the largest and most successful payment processor in the world, having claimed nearly 60% of all card transactions in 2013, Visa has a massive network that provides it with a competitive moat that appears almost unassailable.

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Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends Visa. The Motley Fool owns shares of Visa. 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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