Coming off yesterday’s 419-point plunge, the Dow Jones Industrial Average rebounded strongly, up more than 75 points to over 11,064, a gain of about 0.7%. The market was able to shake off a flurry of recent bad news that included a poor U.S. jobs report, discouraging inflation data and more concerns about Europe, instead focusing on the strong earnings season and bargain prices for blue chippers. For the year, the Dow is down more than 5.6%. During the past five days of trading, the Dow has lost almost 2.9%. Bullish sentiment is at 66% this morning.
Hewlett-Packard (NYSE:HPQ) was down more than 22% in early trading to under $23, losing more than $6.60 per share as it announced it is considering the sale or spinoff of its personal computer division and is buying the business analytics firm Autonomy for $10.2 billion. Its earnings met Wall Street estimates, however. In a conference call, CEO Leo Apotheker remarked about the proposed sale and/or spin-off, “It was about transforming HP for the future. It was a tough decision.” Two holds and two downgrades were issued for Hewlett-Packard by analysts this morning. HPQ now is at a six-year low and has a relative strength index rating of 19.44, with 30 considered the floor for a stock being oversold.
Off by more than 80 cents, or 1.2%, was Coca-Cola (NYSE:KO), which dropped to under $66.90 per share. Coca-Cola just announced it would be investing $4 billion in its operations in China. Coca-Cola is focusing more on China because of lagging sales in the U.S. market. For the week, KO is up about 2%.
IBM (NYSE:IBM) was trading lower by more than $2.40 and 1.5% early as it fell below $161. The entire tech sector was off in early am buying and selling. Down more than 10% for the month, IBM has an RSI rating of 37.38.
Bargain shoppers liked the low, low prices of Wal-Mart (NYSE:WMT) and took advantage of yesterday’s sell-off. The price was up about 40 cents, more than 0.7%, to over $52.15. Up more than 4% for the week, Wal-Mart recently reported strong earnings on better international sales and cost cutting throughout the company.
Up more than $2.20, or 2.4%, McDonald’s (NYSE:MCD) was over $87.80 on an analyst upgrade and flight to safe-haven equities. McDonald’s also has plans to expand its number of restaurants in China to 2,000 by 2013, up from the present 1,300. For the year, McDonald’s is up more than 20% thanks to robust earnings and a series of positive analyst recommendations, seven since June.
Home Depot (NYSE:HD) continued to build on its strong recent earnings, gaining about 0.9%, or 30 cents per share, to around $32.50. A good earnings report from Home Depot and a bad earnings from Lowe’s, its main competitor, has the hardware store chain up more than 7% for the week and almost 18% for year. Home Depot has received two positive analyst recommendations in August.
Jonathan Yates does not own any of the stocks mentioned in this article.
