Dow Recovers After a Case of Bad Sushi
May 23rd 2013 10:00PM
Updated May 24th 2013 1:00AM
It wasn't exactly Godzilla attacking, but the Japanese Nikkei index fell a whopping 7.3% today, taking U.S. markets down with it in the morning. Major European indexes were all down more than 2%, while the Dow Jones Industrial Average fell nearly 1% this morning. The blue chips battled back, however, to finish just 0.1% lower.
The cause of the Nikkei crash seemed to be a weak manufacturing report from China, and concerns that the Federal Reserve could cut its Quantitative Easing program. The manufacturing report in question was the Chinese purchasing managers' index, which showed its first contraction in seven months, at 49.6, after a reading of 50.4 last month. Economists had expected a figure of 80.3. The Nikkei had also gained 80% in the last seven months, riding the worldwide bull market, so the correction needs to be viewed in that context. Many pundits have expected the stock-buying fever to break, which the Nikkei's crash may be evidence of, but the Dow's resilience today seems to be a sign that American markets are stable, and not inflated.
Back on the home front, however, economic data was positive, as initial unemployment claims dropped after a spike over the last two weeks, coming in at 340,000, below projections of 348,000. Continuing unemployment claims also fell unexpectedly by more than 100,000, to 2.91 million last week, indicating that long-term unemployment may be improving. Finally, new home sales topped estimates, coming in at 454,000 -- good news for the housing recovery.
Hewlett-Packard also helped the Dow recover ,as shares shot up 17.1% today after the PC-maker beat earnings estimates and boosted its outlook in its quarterly report last night. HP posted an adjusted EPS of $0.87 on expectations of $0.81, and said it now expects full-year earnings per share of $3.50-$3.60, ahead of the analyst consensus at $3.49. New CEO Meg Whitman's turnaround strategy of focusing on enterprise services and harvesting PC sales seem to be taking hold, as the enterprise segment outperformed expectations last quarter.
Boeing shares also moved up 1.9% as the aircraft-maker's once-troubled 787 Dreamliner jets began flying to China once again, after regulators allowed the composite plane to begin flying in its airspace. The 787 has already received approval from the U.S., Japan, and Europe to take to the skies once again, meaning that the plane's three-month hiatus seems to be over, and Boeing can begin delivering them once again.
In late-breaking news, the Nikkei was up nearly 3% Friday morning, which could bode well for the Dow tomorrow.
The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.
The article Dow Recovers After a Case of Bad Sushi originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.