3 Stocks Leading the Dow's Monster Quarter

Wow! What a quarter. All three major indexes came out swinging and had impressive gains marked by surprisingly little volatility. Given the seemingly daily questions regarding Greece defaulting (technically yes), the domestic economy finally recovering (a strong maybe), and Linsanity's sustainability (resoundingly on hold), what we've seen is astonishing.

With that in mind, let's take a closer look at how the major indexes closed the first quarter and then take a closer look at three Dow components that performed even better for investors.

Index

Gain / Loss

Gain / Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI  ) 920.69 7.49% 13,212.04
Nasdaq 466.37 17.77% 3,091.57
S&P 500 143.04 11.30% 1,408.27

Source: Yahoo! Finance.

These are historical returns. The Nasdaq saw its best performance since 1991. That's right; not even the go-go dot-com boom of the late '90s that propelled the index above 4,500 saw a three-month stretch that topped the opening quarter of 2012. Not to be left out of the record books, the Dow and S&P 500 both notched their largest percentage gains since 1998 and their largest first-quarter points gains since, well, ever. The average Dow component turned in a gain of 11.2%, but several companies fared significantly better.

So which companies were responsible for setting the Dow ablaze in 2012? Financials largely dominate the top spots, with charge-card king American Express and its 22.7% gain just missing the cut for a top-three spot by a mere 150 basis points. But the real champs are the Wall Street banks, with JPMorgan Chase (NYSE: JPM  ) gaining 38.3% and Bank of America (NYSE: BAC  ) turning in a remarkable 72.1% increase. The resolution of the Greek non-default and especially the good Federal Reserve stress-test results boosted the entire financial industry, but the positive effects were felt acutely at the perceived weaker operators such as Bank of America. With the Fed hinting that future stimulus is growing less likely, it may be tough for the banks to keep these results running the rest of the year once the easy money stops flowing.

Tech giant Microsoft (Nasdaq: MSFT  ) rounds out the top three thanks to a 24.2% increase in its shares over the past three months. The company has been busy readying its new Windows 8 operating system for release later this year and is focusing on establishing a foothold in mobile -- especially in China, where Apple (Nasdaq: AAPL  ) commands only 7.5% of the market -- before the door gets slammed shut. If the tablet-friendly Windows 8 system can attract business customers away from the iPad or the mobile initiative is successful, Microsoft could have some growth drivers it hasn't seen in years. For investors excited about that potential, Microsoft's cheap valuation and nice dividend yield are an added bonus.

A better approach
Microsoft may seem like a mature company, but it still has tremendous growth potential, especially in China. The Motley Fool has created a special free report about three domestic stocks not only winning in the U.S., but also poised to conquer global markets. To uncover these stocks today, take a look at our special free report, "3 American Companies Set to Dominate the World." Don't miss out on this limited-time offer and your opportunity to discover these world-beating businesses before the market does. Access your report -- it's totally free.

David Williamson holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, JPMorgan Chase, Bank of America, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple and Microsoft, creating bull call spread positions in Microsoft and Apple, and creating a write covered strangle position in American Express. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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10/1/2014 4:06 PM
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DOW JONES INDUSTRI… CAPS Rating: No stars
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Apple CAPS Rating: ****
BAC $16.82 Down -0.23 -1.35%
Bank of America CAPS Rating: ****
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Microsoft CAPS Rating: ***

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