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Midday Market Update: Facebook Flies, DowDuPont Disappoints, and GE Jumps

By Dan Caplinger – Updated Apr 25, 2019 at 12:47AM

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Thursday was a mixed day on Wall Street, with major market benchmarks behaving differently. The Dow was up just 5 points as of noon EST, but the S&P 500 was up almost 1%, and the Nasdaq Composite jumped to a 1.5% gain. Earnings season has moved into high gear, and with dozens of companies reporting their latest results this week, investors are scurrying to see which companies are best-positioned to take advantage of opportunities for growth in 2019.

Among high-profile stocks, shares of social media giant Facebook (META 0.93%) and industrial conglomerate General Electric (GE 1.07%) enjoyed strong gains, but chemical company DowDuPont (DD 1.34%) found itself on the losing end of the market stick. Their respective reports reveal some of the push and pull going on within the U.S. economy right now, and investors can learn from the challenges each of these companies faces and what they're doing to try to overcome those obstacles.

Facebook logo in white on a blue background.

Image source: Facebook.

Facebook gets its mojo back

Facebook shares were higher by nearly 13% at midday after the social media company reported its fourth-quarter financial results late Wednesday. Sales climbed by 30% from the fourth quarter of 2017, which was significantly faster than the roughly mid-20% growth that Facebook had anticipated. Earnings per share jumped 65%, and although most of those gains came from new tax rules, Facebook was still able to report adjusted earnings growth even after making huge spending increases in order to resolve issues related to privacy and alleged misuse of customer data.

Facebook warned that expenses are still likely to grow at a 40% to 50% rate during 2019. But long-term investors have to be pleased that the social media giant is taking aggressive steps to resolve concerns proactively. If its moves prevent a regulatory response from federal or state governments, then Facebook will have spent its money wisely while working to regain consumer confidence as well.

Check out the latest Facebook earnings call transcript.

DowDuPont's a downer

DowDuPont saw its shares fall 8% as investors dealt with the ramifications of the chemical conglomerate's latest earnings report. Adjusted earnings for DowDuPont were up 6% from the year-ago period, but revenue stayed largely flat as adverse currency impacts offset gains from higher prices and increases in volume. Yet investors weren't happy with the company's call for potential weakness in the first quarter of 2019, and they took to heart negative comments about the state of the global economy.

What's really hurting DowDuPont is that investors are in a holding pattern until the company moves forward with its planned breakup into three parts. CEO Ed Breen said that he still expects materials science specialist Dow to separate from the combined company in April, followed by the spinoff of Corteva Agriscience in June, leaving DuPont as a third independent company containing the remainder of the its business lines. Until that happens, it'll be tough for the combined DowDuPont to inspire much confidence from investors.

Check out the latest DowDuPont earnings call transcript.

GE gets more aggressive

Finally, General Electric's stock climbed 15% in the wake of its own release of fourth-quarter financial results. The conglomerate emphasized the need to "make GE simpler and stronger," highlighting recent moves that included reducing its quarterly dividend, accelerating the company's sale of its stake in oil-field services company Baker Hughes, and selling off noncore assets in the GE Industrial and GE Capital segments. The company also announced a settlement with the Department of Justice under which it will pay $1.5 billion in civil penalties to address issues related to its WMC subprime mortgage lending unit.

Investors were pleased with CEO Larry Culp's combination of action and restraint, as he maintained a high-level focus on improving how the company sets strategic priorities. With so many segments, that's been a problem for General Electric in the past, but investors have responded favorably to the idea that simplifying GE's business to concentrate on the best prospects for maximum growth is the right way to move forward.

Check out the latest GE earnings call transcript.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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