Why the Dow Jumped This Morning

Thursday brought another day of mixed economic news. Weakness in the construction and manufacturing sectors held back optimism over another week of relatively low unemployment claims, and consumer spending and income both came in below expectations.

But the stock market didn't let anything dampen its enthusiasm, as a gentle rally reversed much of yesterday's losses. At around 10:45 a.m. EST, the Dow Jones Industrials (INDEX: ^DJI  ) were up 37 points to 12,989. The S&P 500 (INDEX: ^GSPC  ) was also higher, rising five points to 1,371.

Wal-Mart (NYSE: WMT  ) wasn't a big mover in the Dow this morning, but it had exciting news. The retailer said that it would increase its dividend to $1.59 per share for the year, a jump of almost 9%. While that is a much slower pace than the 20%+ dividend increase Wal-Mart made last year, it nevertheless reflects enthusiasm about its business prospects.

Bank of America (NYSE: BAC  ) rose 1.4% despite once again venturing into territory that created huge controversy last year. The Wall Street Journal reported that B of A is looking into raising fees on basic checking accounts to induce customers to use online banking services or conduct more profitable business with the bank. Pilot programs in several states are charging anywhere from $6 to $25 monthly for certain accounts, but with the ability to avoid those fees by using other B of A services.

Finally, DuPont (NYSE: DD  ) rose more than 1%. The chemical giant said that it would increase prices on its titanium dioxide products for sale in the Asia-Pacific region by $200 per metric ton next month. Price increases for the pigment have driven sales growth at a number of chemical companies recently, and if the trend continues, DuPont should benefit from plans to increase capacity within the next two to three years.

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Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter here. The Motley Fool owns shares of Wal-Mart and Bank of America. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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  • Report this Comment On March 01, 2012, at 11:50 AM, xmmj wrote:

    "Weakness in the construction and manufacturing sectors..."

    Actually, "weakness" is relative. If you look at the numbers, especially the detailed numbers, it is not so bad. Yes it IS a bit disappointing, however, almost all areas are still showing growth - just slightly slower growth. To me, this is the kind of report where we need to say "Hmmmm... let's wait and see if this is some kind of new trend, or just a blip on the way to recovery."

    Particularly interesting to me are:

    1- Exports grew significantly

    2- Customer inventories are listed as too low.

    3- The comments section seems to show guarded optimism.

    #2 hints that soon these customers will need to refill their inventory - i.e place new orders. Add this to the fact that 4-week average of new unemployment claims, dropped 5,500 to 354,000, keeping it at a four-year low.

    All this to me suggest an optimistic view - guardedly optimistic, perhaps - but optimistic none the less.

    ======================

    MANUFACTURING AT A GLANCE

    FEBRUARY 2012

    Index Series

    Index

    Feb Series

    Index

    Jan Percentage

    Point

    Change

    Direction Rate

    of

    Change

    Trend*

    (Months)

    PMI 52.4 54.1 -1.7 Growing Slower 31

    New Orders 54.9 57.6 -2.7 Growing Slower 34

    Production 55.3 55.7 -0.4 Growing Slower 33

    Employment 53.2 54.3 -1.1 Growing Slower 29

    Supplier Deliveries 49.0 53.6 -4.6 Faster From Slowing 1

    Inventories 49.5 49.5 0.0 Contracting Same 5

    Customers' Inventories 46.0 47.5 -1.5 Too Low Faster 3

    Prices 61.5 55.5 +6.0 Increasing Faster 2

    Backlog of Orders 52.0 52.5 -0.5 Growing Slower 2

    Exports 59.5 55.0 +4.5 Growing Faster 4

    Imports 54.0 52.5 +1.5 Growing Faster 3

    OVERALL ECONOMY Growing Slower 33

    Manufacturing Sector Growing Slower 31

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