On Friday morning, the Dow Jones Industrials (DJINDICES:^DJI) climbed higher from the start, as signs that a frosty winter didn't completely freeze the U.S. economy made investors more optimistic about the potential for growth during the rest of 2014. The Commerce Department reported that personal income and personal spending both rose 0.3% in February, marking slow but steady improvement that could accelerate during the spring thaw. In response, the Dow was up 145 points as of 11 a.m. EDT. But interestingly, consumer stocks weren't leading the Dow higher, as technology titans Microsoft (NASDAQ:MSFT) and Cisco Systems (NASDAQ:CSCO) held that honor, along with pharma giant Merck.

Microsoft climbed almost 3% this morning in the aftermath of its much-heralded release of its Office software for Apple's iPad. Yet even as analysts disagree about whether Office will get a big following among iPad users, what's likely behind Microsoft's big move higher is simply the assertive vision from new CEO Satya Nadella. After a long period during which former CEO Steve Ballmer was on his way out and uncertainty plagued the tech giant, Microsoft investors are happy to see the company embrace the new growth opportunities from mobile and cloud computing. Even though competition is fierce in the arena, just the attempt to become more relevant has lifted Microsoft stock to much greater heights than many of its tech peers have seen lately; that's good news for Nadella and his management team in their transition to power.

Microsoft CEO Satya Nadella. Source: Wikimedia Commons.

Cisco also jumped 2% as investors look more closely at its own cloud-computing initiative. Cisco stock hasn't done nearly as well as Microsoft lately, as investors see the networking specialist as having a harder time adapting itself to the new reality of the tech world. Microsoft has long managed a more diverse set of offerings as a tech conglomerate, putting it in better position to drive expansion opportunities and find new areas on which to capitalize. By contrast, Cisco trying to move beyond its networking and communications niche, and the growing pains have been difficult as the company and other tech players invade each other's traditional territory. Cisco has a much tougher road to walk than Microsoft in order to regain its past success, and longtime CEO John Chambers hasn't yet seen the success that Nadella is having in convincing investors that better times are ahead.

Consumers will keep driving the Dow's long-term performance, but that doesn't mean consumer stocks are the ones that will necessarily benefit the most from a stronger economy. Keep your eye on well-known tech companies like Microsoft and Cisco to see how they respond to rapidly changing conditions in their industry.


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