Why the Dow's Finally Soaring

After the big plunge over the past month, bullish investors knew it was just a matter of time before stocks bounced back. Today, the market delivered big gains, with most news sources pointing to the European Central Bank as the catalyst for the jump. Refusing to bow to pressure to stimulate Europe's economy, the ECB left interest rates unchanged. But sentiment in the U.S. is very different, as a Fed Open Market Committee member said that extending the Fed's Operation Twist is still on the table. With a whiff of stimulus in the air, the Dow Jones Industrials (INDEX: ^DJI  ) launched upward almost 170 points just before 11 a.m. EDT. The Nasdaq Composite (INDEX: ^IXIC  ) rose even more strongly, jumping nearly 2%. All 30 stocks in the Dow were up.

Intel (Nasdaq: INTC  ) was up more than 2% despite a report showing a year-over-year drop in worldwide semiconductor sales. The measure posted a 3.4% rise from the previous month, however, with some signs of strength in Asia, the Americas, and even Europe.

AT&T (NYSE: T  ) was one of the stocks posting the smallest gains. A Wall Street Journal article last night highlighted the challenge that the wireless carrier is having with customers choosing calling plans with fewer minutes for smartphones. With a trend toward data and away from voice, smartphones are less about phones and more about computing features like apps. AT&T needs to navigate those trends if it doesn't want to lose revenue.

Johnson & Johnson (NYSE: JNJ  ) also traded about flat as it announced that it would stop selling a surgical mesh product that has reportedly caused injury and even death. The problem is just the latest example of a troubling trend that has plagued J&J for years, with a huge number of recalls and other problems calling the company's quality control into question.

Stop worrying about Europe
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Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Intel and Johnson & Johnson, as well as creating a diagonal call position in Johnson & Johnson. 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 June 06, 2012, at 11:20 AM, 5forfighting wrote:

    Don't discount the voting results in Wisconsin Tuesday as part of the catalyst as well.

  • Report this Comment On June 06, 2012, at 12:50 PM, haysdb wrote:

    You're kidding.

  • Report this Comment On June 06, 2012, at 5:58 PM, SwiperFox wrote:

    While Mr. Walker's success might have had an effect on the market, I feel that the engagement of Miley Cyrus was the key factor. Of course, we shouldn't ignore the Queen's Jubilee Flotilla as a possible market mover.

    Be ready to short the market when Walker is indicted.

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