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Stock Market News: Big Changes at Alphabet; Union Pacific Chugs Ahead

By Dan Caplinger – Dec 4, 2019 at 11:22AM

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Markets rebounded after yesterday's trade-related scare.

Wednesday morning brought a recovery to Wall Street, as major benchmarks regained some of their lost ground from yesterday. Investors seemed to take comfort from more favorable comments regarding trade negotiations between the U.S. and China, which suggested that a preliminary agreement on some key issues might still be possible in the next couple of weeks. As of 11 a.m. EST, the Dow Jones Industrial Average (^DJI 0.41%) was up 176 points to 27,679. The S&P 500 (^GSPC 0.56%) rose 21 points to 3,114, and the Nasdaq Composite (^IXIC 0.31%) picked up 47 points to 8,568.

Among individual companies, Alphabet (GOOG -0.19%) (GOOGL -0.15%) made a major change to its management structure that marks a huge transition for the tech giant. Meanwhile, Union Pacific (UNP 1.24%) enjoyed modest gains as shareholders come to terms with the prospects for the rail industry and its key players.

Alphabet enters its next generation

Shares of Alphabet rose 2% after the tech company announced that co-founders Sergey Brin and Larry Page would move out of their current executive roles. Although the two will remain involved and active with the company they helped create, they're handing over the reins in an effort to unify the CEO role throughout the organization.

Glass office building with landscaping in front and Google logo on side.

Image source: Alphabet.

Sundar Pichai will take Page's place as CEO of Alphabet. Pichai is already chief executive officer for Alphabet's Google subsidiary, and much of the announcement highlighted the work that he has done at Google and why it makes sense for Alphabet and Google to have a single CEO. In particular, Page and Brin said that now that Alphabet's identity as parent company is solid and both Google and Alphabet's "other bets" business unit are running efficiently, it's the right time to simplify the management structure.

Despite the move, investors should expect Brin and Page to retain pivotal roles in overseeing the company. Both of the co-founders will keep their seats on the board of directors, and both still have a large enough share of voting rights to retain control of strategic decisions for the company.

Nevertheless, today's move higher for the stock indicates that investors approve of the transition. With Pichai having done a good job at Google, shareholders hope that he can similarly energize the rest of Alphabet's business and keep the entire company moving forward.

Union Pacific stays on the rails

Shares of Union Pacific rose 2% as investors breathed a sigh of relief in response to projections for the fourth quarter. Even though the news from the railroad wasn't great, it still appeared to be better than many had feared.

Tough conditions in the railroad industry have Union Pacific expecting to see volume for the fourth quarter fall 11% from year-ago levels. That's somewhat worse than previous guidance had suggested, and the company also projected significant revenue declines.

Union Pacific faces a host of issues that threaten its business right now. Trade tensions are reducing export volumes, while economic slowdowns in many parts of the world have also had a negative impact on demand for shipping. Yet the railroad has responded with moves to improve efficiency. Its precision scheduled railroading initiatives have sought to reduce delays and shorten routes with longer trains and higher speeds.

For much of 2019, Union Pacific's shares have treaded water, waiting for signs of which way the geopolitical and macroeconomic winds would blow. For now, it looks like investors have high hopes that things will turn out well for Union Pacific and the railroad industry more broadly.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends Union Pacific. The Motley Fool has a disclosure policy.

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