Why the Dow's Climbing Today
Jul 26th 2012 1:08PM
Updated Jul 26th 2012 8:44PM
Markets soared this morning as the stars aligned to produce positive news regarding Europe, the American recovery, and corporate earnings season. European Central Bank head Mario Draghi stole the show, as his pledge to "do whatever it takes to preserve the euro" hinted at further stimulus or quantitative easing from the bank. European pessimism had sent markets spiraling the previous few days, so today's announcement was a welcome turn of events for investors. At 12:15 p.m., the Dow Jones Industrial Average (INDEX: ^DJI) had risen 1.3% while the S&P 500 (INDEX: ^GSPC) leapt 1.2%.
In domestic news, positive jobs numbers contributed to the market euphoria. The Labor Department reported initial jobless claims fell 35,000 to 353,000, while economists had predicted only a slight decline to 380,000 jobless claims. However, hiring is always volatile this time of year due to temporary shutdowns in automobile plants, so "the latest improvement should probably be partly discounted," according to Goldman Sachs economists. Another positive sign for the domestic economy was an increase in durable goods orders. While analysts only expected a 0.3% gain, durable goods orders increased 1.6%, a second indication of a possible market turnaround.
Earnings season was the third factor motivating the Dow's rise. 3M (NYS: MMM) , ExxonMobil (NYS: XOM) , and United Technologies (NYS: UTX) reported today. Conglomerate 3M reported earnings of $1.66 per share last quarter, surpassing estimates of $1.65 and last year's $1.60. Although revenue fell 2%, margins improved and shares of 3M surged 1.8%. ExxonMobil increased its profits by 49%, although Q2 earnings per share fell $0.09 short of analysts' projections of $1.95. Exxon shares posted mild gains, up 0.75%. United Technologies also lagged the Dow slightly, even though its quarterly earnings of $1.47 per share exceeded expectations of $1.42 per share. Conference call listeners were surprised that CEO Louis Chenevert participated in the call instead of the CFO, a move intended to highlight the importance of United Technologies' $16.5 billion purchase of aerospace manufacturer Goodrich. United Technologies shares gained only 0.2%.
So far, the ups and downs of earnings season could make an investor dizzy. The invincible Apple finally showed it can miss expectations and Zynga showed just how hard a stock can fall on an earnings miss. All eyes will turn to Amazon and Facebook later today when they release earnings reports this afternoon. To stay up-to-date on the latest news, be sure to take advantage of the free My Watchlist feature from The Motley Fool. To get started, click one of the links below:
The article Why the Dow's Climbing Today originally appeared on Fool.com.Fool intern Charlie Kannel owns no shares of the companies mentioned above. The Motley Fool owns shares of Amazon.com, Facebook, ExxonMobil, and Apple. Motley Fool newsletter services have recommended buying shares of 3M, Goldman Sachs, Amazon.com, and Apple. Motley Fool newsletter services have also recommended creating a bull call spread position in Apple and a diagonal call position in 3M. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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