On the surface, key Dow component Johnson & Johnson (JNJ) reported strong earnings, with EPS of $1.58 coming stronger than the $1.56 consensus expectation, despite revenue of $1.81BN missing consensus of $18.28BN. Among the key notables in the earnings report was the company's announcement it was in a process to evaluate potential strategic options for the Johnson & Johnson Diabetes Care Companies, specifically LifeScan, Animas, and Calibra. Such option "may include the formation of operating partnerships, joint ventures or strategic alliances, a sale of the businesses."

However, the reason why the stock was over 2% lower in the pre-market, and pressing the entire Dow average as a result, is because Dow took a page out of the IBM playbook, when it used yet another sharply reduced effective tax rate, which in Q4 dropped to 14.5%, on an adjusted basis (and 11.8% unadjusted), down from 17.7% the prior quarter. Had JNJ used its previous tax rate, it would have missed both the top and bottom line.

Additionally, Wall Street appears to be further disappointed with the company misses across virtually all key drug sale categories, as follows:

• 4Q Remicade rev. $1.62b, est. $1.64b
• 4Q Stelara rev. $879m, est. $881.7m
• 4Q Zytiga rev. $519m, est. $588m
• 4Q Imbruvica rev. $346m, est. $377m
• 4Q Invokana rev. $371m, est. $387.7m
• 4Q Simponi rev. $426m, est. $445m
• 4Q Olysio rev. $10m, est. $33m (1 est.)
• 4Q Xarelto rev. $598m, est. $559.7m

Completing the disappointing trifecta was JNJ's outlook, which came in below the Wall Street consensus estimate: the company now sees FY17 sales $74.1b to $74.8b, and FY adj. EPS $6.93 to $7.08.