The Dow Jones Industrial Average (^DJI -0.47%) rose on Wednesday as International Business Machines (IBM -0.90%) and Coca-Cola (KO 0.30%), both beaten down this year, posted big gains. The rally comes despite a private-payroll report from ADP that badly missed expectations. The Dow was up about 1% by 2:20 p.m. EDT.
Along with IBM and Coca-Cola, shares of Intel (INTC 1.05%) rose after the company launched its Tiger Lake laptop chips. Intel stock has also performed poorly this year.
Intel launches Tiger Lake laptop CPUs
Chip giant Intel officially launched its 11th-generation Core processors for laptops, code-named Tiger Lake, on Wednesday. The chips will battle rival Advanced Micro Devices and its Ryzen 4000 Mobile chips, which launched earlier this year.
Intel is promising that its new chips will beat the competition across a variety of workloads. Comparing Intel's i7-1185G7 processor to AMD's Ryzen 7 4800U, Intel claims 20% faster office productivity, up to 2.7 times faster real-world photo editing, and 2 times faster real-world video editing. Compared to Intel's previous-generation products, the new chips will deliver up to twice the gaming performance thanks to the new Iris Xe integrated graphics.
Third-party testing will provide a better idea of how these new chips perform. There are 150 designs in development from companies including Acer, Asus, Dell, Dynabook, HP, Lenovo, MSI, Razer, and Samsung. If Intel's performance claims hold up, the company may be able to limit AMD's laptop market-share gains.
Intel stock has taken a beating this year, largely sitting out the recent rally in tech stocks. Shares are down around 13% year to date, with much of that decline due to the company's disclosure that its 7 nm manufacturing process would be delayed. The Tiger Lake news was enough to drive shares higher on Wednesday, with Intel stock up about 2.8% in the afternoon.
IBM and Coca-Cola catch bids
The biggest gainers in the Dow on Wednesday were IBM and Coca-Cola, despite no significant news for either company. Neither stock has fared well this year. IBM is down around 5% year to date, while Coca-Cola has shed close to 8%.
IBM has been shifting away from legacy businesses toward fast-growing areas like cloud computing, artificial intelligence, and data analytics for years. It's been a painful transition for investors, with both revenue and profit down substantially. Since peaking in 2013, IBM stock has lost 40% of its value.
The company has been hit by the pandemic as large customers have pulled back on spending. Revenue slumped 5.4% in the second quarter, and earnings per share tumbled 31% on an adjusted basis. While the company is facing challenges, the stock trades for around 10 times 2019 earnings, far less expensive than the broader market.
Coca-Cola has felt even more pain due to the pandemic, with sales to restaurants falling off a cliff. Total sales were down 26% in the second quarter, even as the at-home channel saw elevated demand. Sales improved as measures meant to slow the spread of COVID-19 were eased, but the restaurant industry may be facing a long period of upheaval that could weigh on Coca-Cola's results.
High-flying tech stocks have gotten most of the attention in recent weeks, but Wednesday was a different story as investors bid up stocks that have been left behind. Both IBM and Coca-Cola stocks were up 3.4% in the afternoon.