The Dow Jones Industrial Average (^DJI +0.02%) is trading flat today, down less than 0.1% as of 2:45 p.m. EDT following mixed economic data and earnings reports. Sales of existing homes fell 1.9% in September from August and face more headwinds going forward. "Home affordability is getting hit quite sharply," National Association of Realtors chief economist Lawrence Yun said, according to Morningstar. Home prices are increasing quickly, while incomes are barely rising, "and now we have higher mortgage rates compared to a year ago. Lower affordability will hamper home sales going forward."
While the Dow on a plateau, here are some movers and shakers today.
General Electric (GE 1.73%) is the index's biggest winner today, trading 2.5% higher. Investors ate up the company's third-quarter results and have sent the stock price to its highest mark in five years. General Electric's strategy to simplify operations and improve profitability is beginning to gain momentum as the company posted a 120-basis-point improvement in third quarter industrial margins to 15.4%. General Electric's industrial division posted 11% growth in profit and is stronger than it has been in years. Investors also have reason to be optimistic going forward, as General Electric's backlogs are worth a record $229 billion and the company continues to return value to shareholders through share repurchases and dividend increases. So far this year General Electric has repurchased $8 billion of its stock and paid out nearly $6 billion in dividends.
Outside of the Dow, Ford (F +1.27%) is gearing up for what should be a great third-quarter earnings conference call on Thursday. Ford's most profitable vehicle is the F-Series truck and sales have continued to be very strong throughout the year. Ford considers any month where F-Series sales break 50,000 a good month; sales this year have topped 60,000 in six of the nine months and have even topped 70,000 twice.
Source: Ford's monthly sales data. Graph by author.
F-Series sales should fuel a strong North America performance for the Blue Oval, but investors should key in on one other important region: Europe.
Ford had previously expected to lose as much as $2 billion in Europe this year, but management recently revised the estimate down to $1.8 billion. Halfway through the year, Ford was still on pace to lose less than $1.8 billion, and the third quarter will give us a much clearer picture of whether Ford was being cautious with that estimate. Lower than expected losses in Europe would be a huge win for investors because returning operations in Europe to profitability is the quickest way for Ford to boost its earnings per share by 2015.
