Telecoms Lag the Market's Gains on Threat From Google

Stock markets surged higher this morning on stronger-than-expected economic data. The S&P/Case-Shiller 20-city composite index showed a 10.9% rise in home prices over the past year -- the largest jump since April 2006. Further, the Consumer Confidence Index also jumped to a five-year high of 76.2 in May from 69 last month. These two indicators are extremely important to the economy and should help drive economic growth in the second half of the year. 

Stocks surged in early trading after the data was announced, but markets cooled off slightly as the day went on. As of 3:20 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 0.75%, while the S&P 500 (SNPINDEX: ^GSPC  ) has advanced 0.65%.

Microsoft (NASDAQ: MSFT  ) is one of the Dow's leaders today, rising 1.8%. IDC released a report predicting a 7.8% drop in PC sales this year, but it didn't predict an outright disaster for the PC in the long term. In 2014, shipments are expected to fall 1.2% from 321.9 million this year, but volume is expected to recover to 333 million units in 2017. The PC refresh cycle has changed dramatically in recent years because PCs last longer than ever before. That's keeping consumers from upgrading to Windows 8, but in the long term, IDC doesn't think they'll give up PCs altogether. 

It's been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

Two giant telecoms are lagging the Dow by a wide margin as Google attempts to upend the market. AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are down 1.2% and 0.9%, respectively, as Google Fiber gains more attention from investors and analysts. Analyst Carlos Kirjner at Bernstein said today that while AT&T and Verizon don't have to worry about their dominant positions being upended in the near term, Google Fiber could eventually upend the entire industry.

I think we're making a mountain out of a mole hill today, and until Google sees success in its initial markets, neither AT&T nor Verizon has anything to worry about. We've seen market-changing promises like free Internet from Google before, but they have yet to hit the market with a wildly successful product. It will take a lot to overthrow the established telecom industry, and my money is on the entrenched players until Google proves its worth in fiber.