Hewlett-Packard Company (HPQ), The Boeing Company (BA), Alcoa Inc (AA): Consumers Kept Wallets Open in July, Boosting Stocks

Hewlett-Packard CompanyAlthough we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

Despite an economy that never seems to gain steam, consumers are spending like we’re back in boom days again. The Department of Commerce’s retail sales report shows another sign of consumer strength, with overall sales up 0.2% in July, or 0.5% when you exclude auto, gas, and building materials. The confidence may not make sense on the surface, but falling layoffs, rising stock markets, and swelling home values give consumers a sense of confidence that’s helping to drive figures higher.

Stock markets didn’t spike on the positive news, but shares are trading higher this afternoon. As of 3:15 p.m. EDT the Dow Jones Industrial Average (Dow Jones Indices:.DJI) is up 0.28%, while the S&P 500 (S&P Indices:.INX) has gained 0.33%.

Hewlett-Packard Company (NYSE:HPQ) is pacing the Dow Jones Industrial Average (Dow Jones Indices:.DJI)’s gains today, rising 1.9%. Analysts from both Citibank and Morgan Stanley released positive reports on the company, predicting an earnings beat next week and citing “identifiable positive catalysts for the stock.” There’s no doubt that Hewlett-Packard Company (NYSE:HPQ) has an opportunity to be a great investment at 7.4 times next year’s earnings estimates, but each of its businesses is in decline, and unless the company can make a splash in tablets or smartphones, I see a value trap coming.

The Boeing Company (NYSE:BA)’s shares are also up 1.9% after the company delivered its first 737-800 to Iraqi Airways. This is the first of 30 aircraft ordered in 2008 and 39 total that the company has on order. The Boeing Company (NYSE:BA) has gotten a lot of bad press because of its problems with the 787 Dreamliner, but its stock is up 43% so far this year, so investors are clearly brushing off those problems. Today’s announcement was business as usual, but it’s a step in the right direction with an especially important customer.

The big loser on the Dow Jones Industrial Average (Dow Jones Indices:.DJI) today is Alcoa Inc (NYSE:AA), which has dropped 1.2%. The stock was the biggest gainer on the Dow last week following a report that China’s factory output had increased almost 10% in July, but that’s not the kind of fundamental pop that can keep investors engaged. Once investors who buy in on news from China dry up, the stock often sinks back to prior levels. That’s why investors should buy stocks based on fundamentals — not just the news of the day, which can steal the market’s attention for a moment but won’t drive a stock in the long term.

The article Consumers Kept Wallets Open in July, Boosting Stocks originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!