Why the Dow's Ignoring the Naysayers Again This Morning
Mar 22nd 2013 11:03AM
Updated Mar 22nd 2013 11:06AM
For U.S. investors, international crises tend to be short-term events that have little long-term impact. That seems to be the direction the banking crisis in Cyprus is taking: Optimism that banks and government officials will successfully resolve the immediate problems before conditions worsen has helped push stocks higher around the world. As of 10:50 a.m. EDT, the Dow Jones Industrials are up 64 points, or 0.45%, erasing most of yesterday's losses as investors instead focus on the recent positive news on the U.S. economic front.
Among Dow stocks, General Electric is up just a few cents, but a report from The Wall Street Journal revealed an interesting story involving the company's GE Capital division. Apparently, GE Capital has been in talks with Dell to buy the computer maker's financial-services business. Working alongside Blackstone, GE Capital is reportedly trying to take advantage of the turmoil resulting from Dell's attempt to go private in order to snatch up lucrative assets opportunistically. The mechanics of the deal might be difficult, but such a move could greatly boost what has been a shrinking part of GE's overall business.
Outside the Dow, BP rose 2.5% after announcing that it would initiate a big buyback of its stock. Having sold off its 50% interest in its TNK-BP venture to Russian oil company Rosneft, BP expects to keep about $4.5 billion of the proceeds to pay down debt, but it should be able to return the rest to shareholders over the next year to 18 months. BP will also own nearly 20% of Rosneft, giving it continuing exposure to the vast opportunities in Russia.
Finally, Micron Technology has soared 10.5% on positive earnings news. Although the company posted a loss for the quarter, highly optimistic comments about rising prices for both DRAM and NAND memory chips point to better times for Micron, and the memory maker has also cut costs to improve margins. Given the up-and-down cycles in the industry, it'll be important for Micron to take maximum advantage of the good times while they last.
GE survived the financial crisis by scaling back its GE Capital division in favor of making strategic bets in energy. But given the speculation about Dell's financial business, where is General Electric really headed with its business strategy? Find out in our premium research report on the conglomerate, in which our industrials analyst breaks down GE's multiple businesses and gives reasons to buy or sell GE today. To get started, click here now.
The article Why the Dow's Ignoring the Naysayers Again This Morning originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. 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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