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Intel and Microsoft Push Dow Higher

By Matt Thalman – Jan 14, 2014 at 1:00PM

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After a terrible start to the week, the major indexes have turned things around and are all moving higher.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

After the Dow Jones Industrial Average (^DJI) lost 179 points on Monday, it seemed like last Friday's poor jobs report was going to make this week long and painful for the market. But as of 1 p.m. EST Tuesday that does not seem to be the case; the Dow is up more than 82 points, or 0.50% , the S&P 500 is higher by 0.86%, and the Nasdaq is up 1.45%. As earnings season picks up steam, let's take a look at two Dow components that saw their ratings change today.

The Dow's biggest gainer by early afternoon is Intel (INTC -0.80%), which is up 3.8%. The move higher comes after the stock was upgraded by two firms Jefferies and JPMorgan Chase today. JPMorgan upped its rating on the chip maker from neutral to overweight, while Jefferies believes that the stock will make a considerable move from where it is now. With the company moving more into mobile and operating valuable in-house production capabilities, Intel has an advantage over the competition when it comes to pricing.  

Shares of fellow Dow component Microsoft (MSFT -0.18%) are up 2.4% despite a downgrade from Citigroup this morning. The rating was cut from buy to neutral based on a balance risk profile with the company's new CEO decision. The analyst believes that an insider getting the job will push shares lower while an outsider will help them rally. Furthermore, the analyst believes that even an outsider may not be make changes as fast as some investors would like to see, which would also cause the share price to fall. Citi holds a $35 price target on Microsoft.  

Microsoft may be moving higher based partly on what GameStop (GME 1.49%) told investors this morning. The video game retailer told investors that fourth-quarter profits will likely be below analysts' estimates because of a larger-than-expected sales decline for PlayStation 3 and Xbox 360 games. While analysts had expected a profit of $2.14 per share, the company now believes the figure will come in somewhere between $1.85 and $1.95 per share. While this news is certainly bad for GameStop investors, it may be a sign that since shoppers were spending money on newer consoles, indicating that Microsoft's Xbox One and Sony's PlayStation 4 performed much better than many expected, and that the companies will report better-than-expected results for the coming quarter.  

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Fool contributor Matt Thalman owns shares of Citigroup, Intel, JPMorgan Chase, and Microsoft. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513

The Motley Fool recommends Intel. The Motley Fool owns shares of Citigroup, GameStop, Intel, JPMorgan Chase, and Microsoft. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,589.77 (%)
Microsoft Stock Quote
Microsoft
MSFT
$254.69 (-0.18%) $0.45
Intel Stock Quote
Intel
INTC
$29.83 (-0.80%) $0.24
GameStop Stock Quote
GameStop
GME
$26.60 (1.49%) $0.39

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

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