The Coca-Cola Company (KO), Johnson & Johnson (JNJ): Does Europe Really Affect the Dow Jones Industrial Average (.DJI)?

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If anything, the biggest influence Europe has on the Dow Jones Industrial Average (Dow Jones Indices:.DJI) is at the individual-company level. For instance, last year, The Coca-Cola Company (NYSE:KO) got only 10% of its revenue from Europe, but the segment provided well over a quarter of its pre-tax profit. Margins in Europe were similar to the high levels The Coca-Cola Company (NYSE:KO) enjoyed in Latin America and far above the core North American market. Johnson & Johnson (NYSE:JNJ) got a quarter of its sales from Europe, maintaining a substantial asset base on the Continent as well. The company hasn’t seen the growth it would like in the region, but Johnson & Johnson (NYSE:JNJ)’s revenue from Europe has avoided the big declines that its U.S. business has seen.

Put Europe in perspective
Ignoring European stock markets entirely is clearly a mistake, as much of what happens in Europe has an impact on the U.S. as well. But giving too much credit to Europe for driving U.S. stocks is also a mistake. Despite the rise of emerging markets, the U.S. is still the largest economy in the world, and its influence makes investors around the world take notice of conditions here.

The article Does Europe Really Affect the Dow? 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 Coca-Cola and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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