Why Coca-Cola and Twitter Jumped

The blue chips moved higher today led by a strong earnings report from Coca-Cola. Twitter also gained on an acquisition.

Jeremy Bowman
Jeremy Bowman
Apr 15, 2014 at 10:02PM

After a mid-day dip into negative territory, stocks gained in the afternoon to finish in the green, led in part by strong earnings reports by two Dow Jones Industrial Average (DJINDICES:^DJI) components, Coke and Johnson & Johnson. For the day, the Dow finished up 89 points or 0.6%, while the S&P 500 jumped 0.7%, and the Nasdaq gained just 0.3% as momentum names continued to struggle.

In this morning's economic reports, the consumer price index rose 0.2% in March just ahead of expectations at 0.1%, indicating that inflation is still under control and that consumer prices were not affected by a larger increase in wholesale prices last month. Year-over-year the CPI was up 1.5%. Elsewhere, an index for New York State manufacturing showed slower growth than expected in April at a level of 1.3 versus estimates of 7.5.

Coca-Cola (NYSE:KO) was the big winner on the Dow today, rising 3.7% after reporting earnings this morning. The beverage giant actually saw a global decline in soda sales for the first time in 15 years, but that was countered by growth in non-carbonated drinks as overall volume increased 2%. Adjusted EPS fell from $0.46 a year ago to $0.44, because of currency weakness, but that was in line with estimates, while revenue fell 4% to $10.58 billion, ahead of estimates of $10.55 billion. On a constant-currency basis, sales increased 2% as the company was affected by the emerging-market currency crisis. European sales were particularly weak as soda volume fell 5% and unit case volume dropped 4%, but growth in emerging markets made up for it as volume sales in China jumped 12%. CEO Muhtar Kent said the company was making "meaningful progress" across its strategic initiatives. The jump in share price was a little surprising, considering the results were only in line with estimates, but investors seem to be happy with the volume increase and the emerging-market growth. Still, Coke sees currency headwinds of 7% on 2014 operating income, so profits are likely to suffer.

Twitter (NYSE:TWTR) shares were also flying higher today, up 11% after announcing an acquisition of one of its data partners, Gnip, for an undisclosed amount. Analysts see the move as evidence that Twitter wants to do more to monetize its data as the social network in the past had sold the data from its tweets to a small group of companies like Gnip, which analyzed the data and sold it corporate buyers. Separately, the company also said it hired former Google executive Daniel Graf as its new product chief. Graf will be charged with the task of making the site more user friendly. While the two moves are no guarantee on an improved performance, the acquisition, in particular, would seem to promise greater profits in the future for the tech upstart.