Despite problems, Boeing rallies, boosts Dow
Blue chips rise after 2 days of losses. Boeing's 3% gain comes despite three 787 problems in as many days.
Stocks finished solidly higher Thursday. A big reason for the gain may surprise: Boeing (BA).
Shares of the aviation giant were up $2.63 to $76.76. The gain recouped nearly three fourths of the 4.6% loss the shares suffered on Monday and Tuesday following news about various problems with Boeing's 787 Dreamliners -- three in the last three days.
Boeing's gain contributed 20 points to the Dow Jones Industrial Average ($INDU), which closed with a gain of 62 points. United Technologies (UTX), which makes engines for other Boeing planes -- but not the 787 -- gained $1 to close at $84.55. It added nearly 8 points to the Dow.
The market's gain came after two straight days of losses and was built on comments from Alcoa (AA) and others that China's economy appears to be moving ahead again. That, apparently, has boosted investor hopes that fourth-quarter earnings and first-quarter guidance might be better than expected.
Earlier Wednesday, the market gave up much of its gains. The Dow had been up as many as 88 points in the morning after falling 105 points on Monday and Tuesday. The Standard & Poor's 500 Index ($INX) gained 4 points to 1,461, after rising as many as 8 points earlier in the day. The Nasdaq Composite Index ($COMPX) climbed 14 points to 3,106. But it had been up as much as 19 points earlier.
One reason for the pullback was weakness in big bank stocks after Credit Suisse downgraded Bank of America (BAC), saying the company was overvalued. Bank of America was also pressured on news of more litigation over its mortgage business. Also moving lower were JPMorgan Chase (JPM) and Citigroup (C). Wells Fargo (WFC), which reports results Friday, was up 2 cents to $34.73.
On the other hand, disk-drive maker Seagate Technology (SGT) reported better-than-expected results late Wednesday and was the top performer among stocks in the Nasdaq-100 Index ($BDX). Rival Western Digital (WDC) was the third-best performer. The index was up 9 points to 2,728.
Second best? That was Facebook (FB), which closed at $30.60, up $1.53 to $30.59 -- its first close above $30 since July 19. There was no news, but reports suggest speculators that had shorted the stocks were settling their positions, thus boosting the shares.
Boeing's latest 787 problem issue was a computer glitch that erroneously flagged a problem with brakes on an All-Nippon Airways flight from Yamaguchi City to Tokyo.
The computer problem followed a leaky fuel line on Tuesday that forced a 787 operated by Japan Airlines to cancel a Boston takeoff. On Monday, an electrical fire broke out in another JAL 787 that had just arrived in Boston from Tokyo.
The three events were the latest in a series of problems with the 787, which entered service in November 2011. It has had technical and electrical malfunctions since then.
Boeing delivered 49 of the planes in 2012, more than analysts had predicted. The company has outlined ambitious plans to double its production rate to 10 planes a month by the end of this year. The planes carry a list price of $206.8 million, although that's where negotiations for the actual price start.
Japan is by far the biggest customer for the Dreamliner to date, with JAL and All Nippon operating 24 of the planes.
Asian customers rallied behind Boeing, Reuters noted, saying such teething troubles were not uncommon on new planes. They confirmed they had no plans to scale back or cancel orders for the aircraft, which has a list price of $207 million.
Qatar Airways Chief Executive Akbar Al Baker, who has previously criticized technical problems or delays with Boeing or Airbus jets, said there were no technical problems with the five 787s currently his company flies.
"It doesn't mean we are going to cancel our orders. It's a revolutionary airplane," he said.
Any new airframe will initially have problems, just like a new run of vehicles from the auto manufacturers. Over time, these discrepancies will be corrected. Boeing deserves much credit for the aircraft they have manufactured and fielded that have stood the test of time. I have been an aircraft mechanic for 31 years, and Boeing has consistently created quality products that is second to none worldwide.
What if the checks bounce? What if Wendys, unlike the government,
has a budget that they choose to honor?
If all employers become as selfish and thoughtless of their employees at to not provide basic health insurance like Wendy's rich bosses, the government will become the single provider of health care--just like most other industrialized countries in the world. My solution: Never, ever eat at Wendy's.
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