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Dow Jumps on Strong Earnings

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

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The blue chips moved up more than 1% on some positive earnings reports and other bullish news.

With the exception of a sudden drop based on a fake tweet, the Dow Jones Industrial Average (^DJI 1.61%) was sailing smoothly today, gaining 1.1%, to finish at 14,719. The market seemed to be moving higher on several earnings from last night and this morning. Netflix shares were up 24% after showing strong subscriber growth for the second quarter in a row, and two out of three Dow stocks reporting earnings this morning moved up strongly. After hours, Apple also released its widely anticipated earnings, moving down 0.5% as a result and promising to return more cash to shareholders despite its first quarterly profit decline in a decade.

Stocks also seemed to benefit from Treasury yields in Spain and Italy, two of the more troubled economies in Europe. They fell to their lowest levels since 2010, with both now below 4.5%. Two housing reports released today were essentially in line with expectations. New-home sales increased slightly to 417,000 last month, ahead of expectations of 415,000, and a federal home price index increased of 0.7% in February, slightly better than the 0.6% expected.

Dupont (DD) was the Dow's big winner, gaining 4.1% as profits beat expectations on strong agricultural  products sales, which increased 14% due to drought conditions in parts of the U.S. Sales in the chemical division were off 17%, but increased seed and pesticide sales helped drive its adjusted quarterly profit to $1.56 a share, ahead of estimates of $1.52 but down slightly from the total a year ago at $1.58. The chemical maker also increased its quarterly dividend two cents to $0.45, good enough for a 3.6% yield.

Travelers (TRV 0.74%) shares finished up 2.1% after the insurance provider said earnings per share improved 15% from $2.02 a year ago to $2.33, soaring past the $2.02 analysts expected. Travelers' bottom line has benefited from price increases implemented over the last two years. Management has argued that an increase in natural disasters necessitates higher premiums. It also hiked its quarterly dividend from $0.46 to $0.50, giving it a 2.3% yield.

United Technologies (RTX 1.54%) was less fortunate, falling 0.8% despite seeing revenue jump 16% on its Goodrich acquisition, though the Otis elevator maker felt the pain of defense cuts. Earnings per share of $1.39 beat estimates of $1.31, but revenue was short by 4% despite the jump. United Technologies also held on to full-year EPS guidance of $5.85-$6.15, below the analyst consensus at $6.11.

Finally, AT&T (T 0.09%) shares also fell flat after hours, losing 2% after it reported losing cell phone subscribers. Ma Bell still managed to increase its subscriber base by 296,000 ahead of estimates, but this was due to 365,000 new tablet connections, meaning the telecom lost 69,000 cell phone subscribers. By comparison, rival Verizon added nearly twice as many wireless subscribers. AT&T's revenue fell 1.5% to $31.36 billion, 1% below analyst estimates, while per-share profit rose from $0.60 to $0.67, beating analyst estimates by $0.03.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,637.19 (1.61%) $516.91
The Travelers Companies, Inc. Stock Quote
The Travelers Companies, Inc.
TRV
$174.87 (0.74%) $1.28
AT&T Inc. Stock Quote
AT&T Inc.
T
$21.32 (0.09%) $0.02
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
RTX
$95.00 (1.54%) $1.44
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD

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

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