Overall, markets closed higher on Wednesday. The Dow Jones Industrial Average closed at an all-time high, up 0.3% to 16580.84. This growth is based in part by the Federal Banks confidence in the economy, displayed by their decision to continue to cut back on their bond buying program by $10 million a month. This program, called quantitative easing, has been constructed to keep interest rates closer to 0% while flooding the market with money. The Federal Bank assured that interest rates will stay close to 0% despite the cut, showing their confidence in the growth of the economy. This, as well as the fact that household purchasing increased, trumped data showing the economy growing only 0.1% as opposed to the predicted 1.1% in the Q1.
The automotive sector has seen some changes since the quarter ended. Ford ended the quarter short at 24 cents per share at 989 million. Whereas last year Ford ended at 40 cents per share at 1.61 billion. The thing is, since the economic downturn in 2008, Ford has seen relatively steady numbers in comparison to other major competitors. However, in light of the recent numbers of falling short, Ford plans to launch 20 new global vehicles in the next year to offset the recent quarter results. Another reason for Ford falling short could be the recent CEO changes that they’re undergoing. Since the economic downturn, a lot of stockholders think very highly in that Ford has not taken any bailout money where GM has. For that reason, stockholders are weary of seeing the current CEO retire. As for GM, their revenue rose this quarter to $37.4 billion from $36.9 billion this time last year. This is good for GM but in comparison with Ford, it is not such a huge feat. If you look at stocks in the past year between Ford and GM, even in the past three or five years, there is much less variability in Ford’s stock.
Twitter (TWTR) saw a decrease of 8.6% in its price of shares on Wednesday. Twitter has, however, increased revenues this quarter. On top of that, the company has finally moved into profitability, something that concerned many investors when the company first went public. These can be attributed the 14 million users Twitter added this quarter, which allowed it to stay right along with analysts’ expectations. Despite a strong showing, it was not enough to impress investors, who were looking for Twitter to be the next Facebook and display explosive growth. Instead, investors are beginning to move their money to companies with cheaper stocks and a more explosive business plan. All of this has led to Twitter’s large decrease and hitting of an all-time low in the middle of the day Wednesday.
Gogo Inc. (GOGO) offers WiFi service on planes for many of the top airlines, such as Southwest, Delta, Airtran, and more. As of now, Gogo holds the largest market share, making the value of the company $1.2 billion. However, AT&T announced Monday that they would be entering the market and offering their 4G network on planes, sending investors in a frenzy. As a result, Gogo Inc.’s stock dropped a whopping 29% on Monday despite its control the market right now. Gogo has been battling the backlash all week, stating they will invest $105 million into their technology to improve it, while the president has been trying to calm investors’ nerves by displaying Gogo’s control of the market.
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