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Money News

Boeing’s Strong Earnings Give Stock Market a Boost

January 31, 2018

  • Boeing reported a significantly stronger fourth quarter than analysts expected
  • The news sent Boeing’s stock soaring in morning trading
  • A single company’s stock can affect the daily movement of an entire index
1 min read

Shares of plane and rocket manufacturer Boeing zoomed skyward on Wednesday, following news of the company’s strong fourth quarter earnings.

As Boeing’s stock price took off, it helped break a two-day losing streak on Wall Street on Wednesday as major indexes soared.

Boeing, maker of 777 and 737 jetliners and important defense industry equipment, beat analyst expectations for the quarter that ended December 31, as it ramped up deliveries for domestic aircraft and secured important defense and space contracts, the company said.

Tax cuts and military spending

Boeing cited the influence of the massive corporate tax cut for its strong fourth quarter, helping it to bring in $3.13 billion of profit, nearly double its profit compared to the fourth quarter a year earlier.

Revenue, which is the total amount of cash a company derives from sales, increased 9% to $25 billion compared to fourth quarter in 2017.

The company is also benefiting from the ramp up in federal military spending, according to reports.

Last week, however, Boeing lost a trade dispute with Canadian competitor Bombardier. It sought a 300% tariff on a class of commercial jets Bombardier sells to U.S. airline companies, according to reports. The U.S. International Trade Commission, which has the authority to set tariffs domestically, voted unanimously against the proposal.

End of a two-day slump

The news of Boeing’s strong financial quarter sent its shares up 6% in morning trading to $358.18, an increase of nearly $20 per share, as key indexes jumped. The Dow Jones Industrial Average increased 203 points to 26,280 before noon, and the S&P 500 rose 12.72 points to 2,834.*

A single company can have a big impact on what happens on a daily basis to a stock market index.

Boeing is an important component of the Dow, which has 30 stocks.

Earlier in the week, weak sales of Apple’s iPhone X factored into the Dow’s most significant decline in eight months.

One stock, big impact

A single company can have a big impact on what happens on a daily basis to a stock market index.

Boeing, which has a market cap of $211 billion, is one of the largest companies listed on the Dow, and significant movement of its share price can affect the index. The Dow uses company share prices to calculate its average.

*Source: Yahoo Finance, January 31, 2018

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

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