Despite the poor quarterly earnings performance and massive losses to technology stocks today, a few of the Dow Jones Industrial Average's (^DJI 0.69%) components did have a very good session this afternoon. But, first, let's take a look at how the major indexes performed. The Dow lost 4 points, or 0.03%, and now rests at 15,543, while the S&P 500 actually pulled out a win today by gaining 0.16%. The big index loser of the session, however, was the technology-heavy Nasdaq, which lost 0.66%, or 23 points.
Unlike most trading days, the key driver today was quarterly earnings. As I mentioned, the Dow's big technology stocks all had a rough day, as Microsoft fell the most, losing 11.4%, then Hewlett-Packard, down 4.52%. IBM lost 2.25%, and Intel shed 0.88% after poor earnings from Microsoft and Advanced Micro Devices put pressure on the PC industry.
On the flip side, General Electric's (GE 8.28%) quarterly report help push its shares higher by 4.61%. Although the company missed revenue estimates of $35.6 billion when it posted sales of $35.12 billion, it did beat earnings-per-share expectations of $0.35 with $0.36. And while that's all good and great, missing on revenue and hardly beating on EPS isn't enough to excite investors enough to drive the stock higher by more than 4.5%. So what is? The company announced that backlog orders were up $7 billion in Q2 from the $223 billion the company reported in Q1. Furthermore, CEO Jeff Immelt told analysts that "Emerging markets remain resilient, and in the U.S. we saw strong growth in orders this quarter". He then went on to state "Europe is stabilizing but still challenged." These comments and the backlog growth have finally made investors believe Immelt when he tells them things are improving and will be better in the future.
Two other big Dow winners came from the health-care industry as Johnson & Johnson (JNJ 0.29%) rose 2.28% and Pfizer (PFE 0.23%) gained 2.11%. Johnson & Johnson reported earnings earlier in the week and the company beat on both the top and bottom lines, but after earnings were announced, shares closed even on Tuesday, compared to Monday's close, at $90.40. While investors surely liked the fact that estimates had been topped, they didn't seem to be thrilled with some comments by management that pricing pressure was increasing. But a poor earnings report, an FDA warning, and weak guidance moving forward from Intuitive Surgical (ISRG 2.21%) yesterday make Johnson & Johnson's medical device unit look stronger than ever. And that's why I believe shares of J&J moved higher today.
As for Pfizer, the likely reason for its shares decline was a Reuters report that the company is no longer interested in buying Onyx Pharmaceuticals, which had been previously reported. Many believe Pfizer decided not to move forward because the cancer drug manufacturer had become too expensive and the valuation no longer made sense. Investors hate seeing hard-earned capital being squandered on expensive, overhyped acquisitions that don't pan out to add meaningful value to the company. If this is the reason Pfizer backed out, it is truly a good one.
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