Hewlett-Packard Company (HPQ), Cisco Systems, Inc. (CSCO): Why Tech Bucked the Dow’s Downtrend

The past two days have been the best example of how volatility works for the stock market. Yesterday, stocks roared higher out of the gate but eventually gave back a substantial portion of those gains. Today, the opposite happened, with big losses slowing getting trimmed over the course of the day. In the end, the Dow Jones Industrials finished down 107 points today, but the next change between last Friday’s close and current levels amounts to just three-tenths of a Dow point. When you look at the market in that light, it’s easier to dismiss the issues of the day and focus instead on the truly long-term implications of market moves.

Hewlett-Packard CompanyAnother thing many investors miss is the fact that even on a down day, some sectors inevitably do well. Today, tech was in the positive spotlight, and two tech stocks in particular did a good job of holding up well despite the overall dour mood in the Dow. Hewlett-Packard Company (NYSE:HPQ) soared 2.4% and set a new 52-week high on continued optimism about the company’s turnaround. Today’s announcement from Hewlett-Packard Company (NYSE:HPQ) about new software allowing businesses to create more user-friendly apps for mobile devices likely wasn’t responsible for the stock’s move, but it does represent the direction in which Hewlett-Packard Company (NYSE:HPQ) is seeking faster growth to replace what it’s losing from declining PC sales.

Also rising was Cisco Systems, Inc. (NASDAQ:CSCO), which gained almost 1%. The company announced a minor acquisition today, spending $107 million to buy JouleX, a company that specializes in energy management for networks and data centers. Given the increased emphasis on cloud computing and big-data initiatives, the question of energy efficiency and heat management becomes crucial for enterprise customers, especially those with the greatest network and data needs that need to focus on keeping costs down.

Finally, The Fresh Market Inc (NASDAQ:TFM) rose 8% after a favorable earnings announcement this morning. With same-store sales gains of 3% and almost 13% higher revenue overall, the specialty grocery retailer managed to boost net profit by about 15% while increasing its gross margins. Yet despite the favorable reaction, value investors need to be careful about the stock’s valuation, especially in light of expectations of 2013 full-year comps coming in up 2.5% to 4.5%. Those figures show that aggressive store expansion will be necessary to keep overall revenue rising at a fast enough pace to drive growth. That won’t be a problem right now, but eventually, The Fresh Market Inc (NASDAQ:TFM) will start hitting up against competition from Whole Foods Market, Inc. (NASDAQ:WFM) and other companies in the healthy-food space.

The article Why Tech Bucked the Dow’s Downtrend originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Cisco Systems, The Fresh Market, and Whole Foods Market and owns shares of Whole Foods Market.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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