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We have grown accustomed over the years to icons like 3M (NYSE:MMM) and Exxon Mobil (NYSE:XOM) impacting the S&P 500, which they are doing today following the publication of their annual results. At this early stage of the day, having posted less than desirable results, Exxon shares are down 1.72%, and, having posted excellent results, 3M shares are down 2.62%. What is truly amazing is that the young upstart, Facebook (NASDAQ:FB) is up a whopping 14.91% (I seem to recall writing about Facebook recently) and having a far greater impact on the S&P than the other two.
Minnesota Mining & Manufacturing posted record sales and EPS for both the final quarter and the full year. Fourth quarter sales rose by 2.4% year-on-year to $7.6 billion, driving a 14.9% increase in EPS to $1.62 from $1.41. The decline in MMM share price today may indicate some investor concern when considering each piece of the pie. The Industrial, Healthcare and Safety & Graphics business groups turned in sales increases of 6.1%, 2.4% and 2.5% respectively, for a total of $5.3 billion. They were tempered, however, by a $1.3 billion decline in Electronics & Energy and a $1.1 billion decline in the Consumer group. The three business groups that generated increased sales did so in all geographical markets. The other two groups reported flat or declining sales in the Asia, Latin America and Canada. This would seem to indicate to me, contrary to other company reports, that 3M might still be eyeing emerging markets opportunistically.
ExxonMobil chairman, Rex W. Tillerson, proved himself to be a silver-tongued devil as he reported a 27% decline in full year earnings as delivering “strong business results in 2013 while remaining focused on improving profitability and long-term shareholder value.” Tillerson must be a graduate of the Barack Obama School of Sophism (BOSS). Either that or he was looking at the sales growth graph upside down. This guy must think that the trip on the Titanic was terrific, looking back on it as a whole.
I am not comparing ExxonMobil to the Titanic, but statements like Tillersons are crafted to condition the reader to believe that the overall report is good, despite the facts that must be reported therein. This is especially true when the chairman’s statement appears at the very beginning of the report.
Having said all that, my intention is to point out that Facebook turned in the phenomenal growth figures that we expected yesterday. It’s current share price of $62.11, if it holds through the day, will establish a new high for the company just shy of its tenth birthday and less than three months from the second anniversary of its IPO. Facebook closed yesterday at 53.53. Add to this, that Facebook is the most actively traded stock today, by far, with 97 million transactions before the U.S. trading day is even half over. The S&P is up 1.07% at 1793.
And now, my point. I would humbly suggest that, for the foreseeable future, it will be the Facebooks, the Googles and the Apples that will be the new drivers of the S&P. Facebook, Google, and Apple have transformed themselves into disruptive, social and commercial information and transaction media. They are not only doing business. They are changing the way that business is done. They are, therefore, taking over the driver’s seat. The bus they are driving is the S&P.
