3 Blue Chips Climbing on Earnings (KO, JNJ, SCHW)

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First-quarter earnings season is supposed to be a dud, but don’t tell that to Coca-Cola (KO), Johnson & Johnson (JNJ) or Charles Schwab (SCHW). These three blue chips delivered some market-pleasing results Tuesday, helping KO stock, JNJ stock and SCHW stock to take off.

Goodness knows the market can use the help. The S&P 500 looks to be working its way out of the April swoon, but heading into Tuesday it was up just 0.7% for the year-to-date.

The Dow Jones Industrial Average — of which JNJ and KO stock are constituents — is having an even rougher year. The blue-chip index was off 2.4% for the year before KO stock and JNJ stock rose after earnings.

Better-than-expected earnings of the type we saw from KO, JNJ and SCHW are the only hope for the S&P 500 if it’s to avoid a year-over-year decline in quarterly profits.

Analysts on average expect the broader market to post a 1.2% drop in first-quarter earnings, according to data from FactSet. That would be the first decrease in S&P 500 earnings since the third quarter of 2012.

Of course, not all of these names reported a year-over-year increase in net income. Right or wrong, the market doesn’t much care about that. Rather, it all comes down to adjusted earnings (which exclude things like one-time charges), and how those adjusted figures compare with expectations. That’s what’s driving KO stock, JNJ stock and SCHW stock after earnings.

Happily for anyone holding JNJ, SCHW stock or KO stock, the Street’s expectations were not disappointed. Here’s a look at the quarterly highlights for Coca-Cola, Johnson & Johnson and Schwab:

Coca-Cola (KO)

Coca-Cola has been having a rough time as people drink fewer carbonated beverages. Indeed, taste for fizzy drinks appears to be in secular decline. That’s a long-term threat to KO’s core business, and it’s already showing up in KO stock, which was down 3.6% for the year-to-date before Tuesday’s pop.

KO first-quarter profit fell more than 7% and revenue dropped 4%. So what’s the cheering about? Excluding charges, KO stock had earnings of 44 cents a share, which matched Wall Street’s forecast. Moreover, revenue of $10.58 billion exceeded analysts’ average projection.

In other good news for KO stock, global volume rose 2%, giving the market some hope that KO is building some momentum in a shrinking market for carbonated beverages. Another hopeful sign for KO stock is that revenue didn’t drop because of lower sales. Rather, it was all due to a stronger dollar. Strip out the effects of currency exchange, and KO would have had top-line growth of 2%.

No, it wasn’t a great quarter, but KO beat the Street’s low expectations, and that’s all it took to give KO stock some life.

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Johnson & Johnson (JNJ)

Johnson & Johnson is having an excellent year in a flat market. JNJ stock was up nearly 8% before it reported what Wall Street likes best: beat-and-raise earnings.

The wider pharmaceutical industry might be struggling with patent expirations on blockbuster drugs, but that’s not bothering JNJ or JNJ stock. Indeed, Johnson & Johnson’s first-quarter earnings rose 35%, driven by continued sales growth in JNJ’s pharmaceutical business.

Excluding special items like tax benefits and charges, earnings rose 7% to $1.54 a share, easily topping Street expectations of $1.47. Revenue expanded 3.5% to $18.1 billion, which also beat analysts’ average forecast.

Better-than-expected earnings and an ongoing cost-cutting program designed to slash $1 billion in expenses over three years helped JNJ raise its full-year outlook. JNJ now sees adjusted earnings coming in at $5.80 to $5.90 a share, up from a previous estimate of $5.75 to $5.85.

Results like this and JNJ’s strategic plan have the market bullish on JNJ stock. JNJ is in the process of dumping its slow-growth products and businesses — a move that should goose margins. JNJ stock also benefits from the cash the strategic plan puts in JNJ’s coffers. Late last month, JNJ sold its ortho-clinical diagnostics business for roughly $4 billion.

Charles Schwab (SCHW)

Charles Schwab said first-quarter profit rose by more than half, helped by higher trading commissions and fees for managing clients’ money. If SCHW can build on the solid results, SCHW stock might finally go somewhere.

SCHW stock is essentially flat for the year-to-date, but the latest quarterly results might just change the market’s sentiment on the discount brokerage. SCHW net income jumped 58% year-over-year, SCHW revenue increased 15%, and both numbers beat the Street’s expectations.

It looks like SCHW is finally getting a boost from the five-year bull market and stocks notching all-time highs — and that bodes well for SCHW stock. Retail investors have been wary of the stock market since the 2009 melt down, hurting commissions and fees at brokerages like SCHW. The latest results suggest that might be starting to change.

For the latest three-month period, SCHW saw trading revenue, asset-management and administration fees all rise 11%. Customer trading volume also rose 11%, to an average of 553,600 trades a day — the highest volume in SCHW history.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.