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Why the Dow Bounced Back by 157 Points Today

By John Divine - Apr 16, 2013 at 6:11PM

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A big comeback in the market a day after the worst drop of 2013.

A day following the Dow Jones Industrial Average's (^DJI 1.52%) worst loss of the year, blue chips rallied from their lows on strong earnings from two of America's most recognizable brands. A report showing that inflation hasn't yet taken a strong hold also helped today's rally, as investors believe this may indicate a continuation of more stimulus efforts from the Federal Reserve. The Dow ended with a 157 point, or 1.1%, gain, closing at 14,756.

Coca-Cola (KO 2.56%) was the star of the day, adding a remarkable 5.7% after earnings that beat expectations by a long shot. Although earnings per share actually declined 13% in the first quarter, but that was good enough to beat analyst projections for the quarter. And Coke's sales actually rose 4% in the period, with international growth coming in higher than domestic growth.

Walt Disney (DIS 0.59%), a company that has come to represent much more than just Mickey Mouse's iconic large ears, tacked on 3.2% Tuesday. Sports broadcasting giant ESPN, a subsidiary of Disney's, delayed a joint news conference with the Southeastern Conference scheduled for Tuesday after the tragic events at the Boston Marathon yesterday. Though nothing's certain about the topic of the press conference, investors are hoping it will usher in the SEC's very own network.

In stark contrast with yesterday -- when all 30 Dow stocks lost ground -- all but two of the index components gained today, and Intel (INTC 0.14%) ended as the third biggest winner, soaring 2.5%. The run-up preceded the chipmaker's earnings announcement this afternoon as Wall Street was optimistic the company could beat the low expectations of the market. Though earnings dropped 26% from last year, no one expected record profits in a quarter that saw the worst decline in PC sales ever documented.

One of the Dow's only two decliners, Verizon (VZ 0.95%) lost 0.4% after DISH Network (NASDAQ: DISH) offered to buy Sprint Nextel (NYSE: S) for $25.5 billion. If the deal were to go through, it would offer new, serious competition to Verizon's TV package. Results are set to come Thursday for Verizon, and maybe the 4.1% dividend will help bring investors back to the stock.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,737.75 (1.52%) $475.85
Intel Corporation Stock Quote
Intel Corporation
INTC
$41.71 (0.14%) $0.06
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$62.54 (2.56%) $1.56
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$103.02 (0.59%) $0.60
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$50.00 (0.95%) $0.47

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

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