GE Falls as the Dow Builds on Yesterday's Gains
Dec 18th 2012 11:00AM
Updated Dec 18th 2012 11:14AM
News that House Speaker John Boehner and President Obama have both made significant concessions in their quest to find a resolution to the fiscal cliff helped send stocks modestly higher this morning. The Speaker is now willing to raise tax rates on those making $1 million or more, while the President has offered to raise his original $250,000 threshold, so the odds of a compromise appear much better than in past weeks. That optimism, combined with positive readings on homebuilder confidence and a three-year low in the trade deficit, helped send the Dow Jones Industrials up about 61 points by 10:55 a.m. EST, while other major benchmarks posted stronger gains.
But General Electric didn't participate in the rally, falling 1.7% as CEO Jeff Immelt reduced guidance for revenue growth at its industrial businesses from 10% to 8%. As Fool contributor Alex Dumortier examined earlier this morning, GE's sales aren't even keeping up with inflation, raising questions about whether the company can grow by other means, such as acquisition.
Boeing is unchanged despite announcing a 10% dividend increase and resuming share buybacks. The positive news for shareholders was tempered by a decision from Turkey's Pegasus Airlines to make a big order from Airbus. With recent problems plaguing its 787 Dreamliner, Boeing needs to work on its execution in order to woo investors for the long haul.
Finally, Alcoa and Caterpillar both responded favorably to positive economic news, rising more than 1.4% each. Both companies have lagged in light of difficult conditions both in the U.S. and abroad, but a possible resolution to the fiscal cliff could eventually lead to a much-needed turnaround in construction and infrastructure activity. That, in turn, could bolster both companies' prospects for the future.
Is GE's dip a buying opportunity?
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The article GE Falls as the Dow Builds on Yesterday's Gains originally appeared on Fool.com.Fool contributor Dan Caplinger has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. 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.
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