Earnings season can be such a tumultuous ride for investors. While we focus on long-term growth prospects and fundamentals at The Motley Fool, it's impossible not to get caught up in the moment when so much news is hitting the airwaves.
Today we learned that Microsoft, a component of the Dow Jones Industrial Average (INDEX: ^DJI), placed an offer to acquire Barnes & Noble's Nook unit, sending shares of the bookseller up more than 90%, only to close up 50%. Very rarely do such developments emerge without warning, and it remains to be seen how the Nook fits into Microsoft's overall game plan.
Another Dow components that saw some movement today was heavy-equipment maker Caterpillar (NYSE: CAT). When Caterpillar reported earnings last week, the market seemed unenthused about the tepid growth rate experienced over in China. Despite the small percentage of revenues derived from this country, Caterpillar is in the process of expanding significantly to take advantage of infrastructure development and housing upstarts. With 16 manufacturing centers already constructed, and nine on the way, investors balked at the thought of a slowdown in such a critical market. On top of that, the company is dealing with a potential strike at its Joliet, Ill., plant because of stalled labor negotiations.
Caterpillar's stock-price run-up in 2012 has been impressive, but Bank of America's (NYSE: BAC) has been remarkable, up more than 46%. Still, Bank of America shares fell 1.7% today because of new developments in an investor lawsuit regarding the bank's purchase of Merrill Lynch in 2008. The suits hinge on whether directors at Bank of America violated their legal responsibilities in approving the merger. While the directors settled for $20 million with plaintiffs, attorneys are objecting on the grounds that the amount is wholly inadequate.
Finally, Procter & Gamble (NYSE: PG) shares continued to fall today as part of a spillover from Friday's disappointing earnings report. Despite the consumer-goods company's strong brands, the report showed that pricing power was minimal in a tight economic environment. As a result, margins were hurt by rising costs and net income fell 16% from the prior-year period.
These stock-price movements reflect a single day's activity, and it's important to keep a long-term perspective on your path to financial success in the stock market. To read about companies that The Motley Fool has selected to secure your financial future, download "3 Stocks That Will Help You Retire Rich." It's free for a limited time, so get yours now.
