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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

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!