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Dow Keeps Heading North, but Tech Takes a Hit

By Jessica Alling - Apr 11, 2013 at 12:00PM

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Bad news from the PC market has separated the Dow from its tech components on its third day of gains.

After huge gains yesterday, the Dow Jones Industrial Average (^DJI 0.17%) is on the move once again. The index is up 67 points as of 11:35 a.m. EDT following positive jobs numbers after last week's disappointing reports. And though the tech sector had been some of the driving force behind the Dow's climb over the past two days, some bad news has caused many of the Dow's big players to fall.

Last week was a rough one for the labor market, which had to bear the brunt of three negative jobs reports. With today's jobless claims release, investors are getting a breather from the bad news. Claims from last week fell sharply to 346,000 -- a 42,000 drop. This follows last week's huge jump to 388,000 claims, which was way over analyst expectations. This week's numbers fell below expectations, giving the markets some added fuel this morning.

Because of the Easter holiday and spring break, jobs data can greatly vary in March and April, which is likely to be the reason we're seeing such great differences from week to week. But overall, the jobs data is signaling a decrease in layoffs, as businesses hold on to their workforces.

Death of the PC -- it's real
Last night, the most recent sales data for PCs was released, much to the detriment of many tech stocks' gains for the week. Worldwide shipments of personal computers fell by 14% in the last quarter, the largest drop ever recorded by the IDC since it began tracking the data in 1994. The drop was double the amount expected by the IDC, and resulted in the fourth consecutive quarter with a year-over-year drop in sales. As you may have guessed, this is terrible news not only for the computer manufacturers, but also for software companies, processor manufacturers, and others.

Hewlett-Packard (HPQ 2.70%) is down 6.23% so far in trading, with news that its shipments were down by 24% year over year. Chief rival Dell's sales were also down, but by a much lower 11%. On the bright side, even though its shipments have dropped, HP still maintains a 25% share of the PC market -- the No. 1 spot.

Microsoft (MSFT -0.05%) is down 4.9% following the news. The company was dealt a double blow when Goldman Sachs downgraded it this morning, stating that its continued losses in market share and weak performance in entering the consumer electronics market is troubling. Mr. Softy is also partially being blamed for the slowdown in PC sales, due to Windows 8. The drastic change in user interface has been questioned, with some consumers feeling confused with the new OS, according to IDC's Bob O'Donnell.

Intel (INTC 0.28%) and its rival Advanced Micro Devices (AMD 0.28%) are both feeling the losses, down 2.65% and 3.07%, respectively. Since both are heavily reliant on the PC market, any slowdown would be a big hit to revenue. Though Intel's latest efforts have made it a contender in the Chinese mobile market, it has a long way to go to gain real market share. AMD has also been working outside the PC, with several new game consoles expected to feature its new Jaguar processor that combines the console's CPU and graphics capabilities onto one chip.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,981.35 (0.17%) $53.35
Intel Corporation Stock Quote
Intel Corporation
INTC
$41.78 (0.28%) $0.12
HP Inc. Stock Quote
HP Inc.
HPQ
$35.71 (2.70%) $0.94
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$259.50 (-0.05%) $0.12
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$91.42 (0.28%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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