Accounting for the nasty post-earnings tumble in shares of semiconductor maker Texas Instruments (NASDAQ:TXN), things could have been much worse for stocks on the Dow Jones today than the final tallies showed.
Semiconductor stocks are widely considered to be tech bellwethers, so when one of those names struggles in fashion to comparable to Texas Instruments today, it would be reasonable to expect the broader tech sector to follow suit. And with technology being the largest sector weight in the S&P 500, it can be difficult for broader benchmarks to ward off weakness in that sector.
The point is that Wednesday wasn’t a great day for stocks, but it could have been worse. And this is clearer when you examine some of the action among members of the Dow Jones Industrial Average.
On what could have been a more eventful Wednesday, a late session rally lifted the Nasdaq Composite by 0.19% while the S&P 500 added by 0.28%. The Dow Jones Industrial Average gained 0.17%, half of the index’s 30 holdings higher in late trading.
Bizarre Reactions
In what can be deemed unexpected surprises, shares of both Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) traded higher despite troubling third-quarter earnings reports. Regarding Boeing, plenty of bad news has been available for investors to consume, so the earnings update probably wasn’t all that surprising.
Boeing said it spent $2.4 billion in the third quarter, with much of those costs attributable to trying to the get the 737 MAX jet airborne again before the end of this year. Management did say that’s possible, perhaps explaining the modest move higher in Boeing stock today. However, with all the controversy surrounding the 737 MAX, the plane is unlikely to be as profitable for Boeing as previously thought.
“The MAX won’t be as profitable as Boeing initially envisioned,” according to Barron’s. “The company is adding $872 million to cost assumptions—spread over a block of 3,100 planes. That’s almost $300,000 per plane. A ‘block’ is an accounting unit aerospace companies use to amortize development cost over.”
Give Caterpillar some love. The industrial machinery gained 1.2% today on more than double the average daily volume even after the company lowered its full-year profit forecast, citing weakness in the global economy.
News that Caterpillar is cutting production in the face of slack demand appears to be the catalyst behind the stock’s decent Wednesday move. As some analysts noted, Caterpillar has a history of being slow to trim production, opting to build inventory into slack markets, but management appears to be taking a different approach this year and it’s being cheered by Wall Street.
CEO Shift Cripples Nike
Sometimes, it takes the investment community time to warm to CEO changes. Nike (NYSE:NKE) investors are hoping that’s the case because that Dow component was smacked today on news that John Donahoe will replace Mark Parker at the helm of the athletic footwear giant.
Analysts noted that Donahoe could prove to be a winning choice for Nike, since it looks to cement its digital/online footprints — industries the new CEO has experience in. As such, some of today’s reaction in NKE stock is likely more about the loss of Parker than it is a slight on Donahoe.
Another Day At The Office
It was another day of gains and flirtations for shares of Apple (NASDAQ:AAPL), which is now up about 10% over the past month. Morgan Stanley boosted its price target on Apple stock to $289, now the highest on the Street. That upward revision comes just days after Raymond James boosted its Apple target to $280.
Bottom Line on the Dow Jones Today
Thursday has the potential to be eventful because today, after the close, Dow component Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA) report third-quarter results. And on Thursday, Amazon (NASDAQ:AMZN) reports after the close, so there is plenty of opportunity over the next 24 hours for markets to comment on animal spirits and the near-term outlook for growth and momentum stocks.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
