U.S. Stocks Rise as Investors Favor Consumer Companies Over Technology

Strategic Insights -

Investors are snapping up shares of companies with dependable earnings, such as McDonald's and PepsiCo, leading to a surge in U.S. stocks. The Dow Jones industrial average rose 1.3% to 9,171.48, its biggest gain since April 2, as consumer-related stocks outperformed technology shares. Computer companies, however, struggled after Dell's first-quarter earnings failed to meet expectations. As a result, Intel, Microsoft, and other computer-related stocks fell, with the Nasdaq Composite Index slipping 0.8% to 1,831.75.

Key Takeaways:

  • The Dow Jones industrial average surged 116.83, or 1.3%, to 9,171.48, its biggest gain since April 2.
  • McDonald's was the Dow's biggest gainer, rallying 3 1/16 to 65 7/8 after Chief Executive Jack Greenberg's positive comments on the company's prospects.
  • PepsiCo's jump of 2 9/16 to 40 1/2 was driven by optimism about its soda business returning to double-digit profit growth.
  • Computer-related stocks, including Intel, Microsoft, and Intell suggested their profits may suffer later this year due to cutthroat competition.
  • The Nasdaq Composite Index fell 14.12, or 0.8%, to 1,831.75 due to weakness in technology shares.
  • Dell slumped 2 27/32 to 91 3/4 after its first-quarter earnings failed to beat analysts' estimates.
  • The Morgan Stanley High Tech Index slid 7.49, or 1.3%, to 575.65 due to declines in computer-related stocks.

Statistics:

  • 15%: The year-to-date rally in U.S. stocks.
  • 9/16: The amount of gain for McDonald's to 65 7/8.
  • 40 1/2: The price of PepsiCo after its gain of 2 9/16.
  • 1.3%: The percentage increase in the Dow Jones industrial average.
  • 0.8%: The percentage decline in the Nasdaq Composite Index.
  • 2 27/32: The amount of decline for Dell to 91 3/4.
  • 7.49: The percentage decline in the Morgan Stanley High Tech Index.

Sources:

  • Palley-Needelman Asset Management Inc.
  • The Wall Street Journal
  • The New York Times
  • Dow Jones Industrial Average (date: unavailable)
  • Standard & Poor's 500 Index (date: unavailable)
  • Nasdaq Composite Index (date: unavailable)
  • Morgan Stanley High Tech Index (date: unavailable)