Please ensure Javascript is enabled for purposes of website accessibility

Dow Should Have Gone Much Higher

By Jeremy Bowman - Updated Nov 17, 2016 at 4:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

IBM's drop held back the blue chips, but it was a good day for stocks today.

Despite trading down most of the day, and finishing slightly higher at 0.1%, the Dow Jones Industrial Average (^DJI 1.98%) should have gone up much more. The index is price-weighted according to its components and, therefore, IBM (IBM 2.09%) holds a disproportionate effect over the index, contributing one-sixth of the overall weight. The tech giant fell 8.3% today after missing earnings last night; that alone dropped the Dow by more than 1%. Aside from IBM, however, the index was overwhelmingly positive. Twenty-four of the Dow's 30 stocks finished the day higher, and its peers, the S&P 500 and the Nasdaq, both finished up 0.9% and 1.2%, respectively.

Still, the market seemed bullish after a number of strong earnings reports after hours last night including Google and Microsoft.

The Dow was cooler than the other two indexes on two earnings disappointments this morning from GE (GE 0.28%), and McDonald's (MCD 1.75%).

General Electric shares were off 4.1%, as the conglomerate posted adjusted earnings of $0.35, in line with estimates and up from $0.29 a year ago. Revenue was down slightly, from $35.2 billion, to $35 billion, but still ahead of estimates. However, poor results in its industrial segments shook investors, as the company said that profits in its industrial equipment and services divisions fell 6% and 11%, respectively. Weakness in Europe also weighed on the industrial giant, as revenue from across the Atlantic was down 17%.

Meanwhile, stock of the Golden Arches was off 2%, as same-store sales declined 1% in the quarter, and the fast-food chain said April numbers are tracking similarly. Comparable sales were down in all three of its major regions -- the U.S., Europe, and Asia-Pacific.  Earnings per share for the quarter moved up to $1.26 -- $0.01 below estimates -- and overall revenue rose slightly by 0.9%, to $6.61 billion, beating estimates of $6.59 billion.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,880.24 (1.98%) $618.34
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$131.17 (2.09%) $2.69
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$238.00 (1.75%) $4.09
General Electric Company Stock Quote
General Electric Company
GE
$75.46 (0.28%) $0.21

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.