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

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

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

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!