How the Dow Recovered This Morning

Yesterday, stocks proved resilient, rebounding after giving up most of their opening gains to give investors a big advance. This morning, the stock market is similarly recovering from early losses after new economic data stoked fears that the economy is slowing down. Both producer prices and retail sales declined in May, supporting the recessionary camp. But rising business inventory data helped put a floor under the market's decline, and after falling as much as 75 points, the Dow Jones Industrials (INDEX: ^DJI  ) had jumped out to a nine-point gain by 10:45 a.m. EDT.

Among Dow stocks, JPMorgan Chase (NYSE: JPM  ) jumped almost 3% as CEO Jamie Dimon gives testimony in Washington before the Senate Banking Committee. Despite protests and political rhetoric from lawmakers, the bank's fate will turn much more on the health of the U.S. economy. Although increased regulation could hamstring JPMorgan in the short run, banks have done a good job of finding new ways to profit even when regulatory constraints have shut off other business lines.

Hewlett-Packard (NYSE: HPQ  ) fell more than 1% following an announcement from rival Dell (Nasdaq: DELL  ) that it intends to start paying a dividend. Both companies have seen their shares fall dramatically, and although the Dell move shows that it has taken steps to try to cut costs and boost its productivity, the low-margin hardware business will almost certainly continue to be challenging for both players. To succeed, HP and Dell will have to boost the higher-margin segments of their respective businesses.

Finally, AT&T (NYSE: T  ) was just about unchanged on the session. So far, the company hasn't responded to rival Verizon's decision to eliminate limited-voice mobile plans in favor of a data-driven framework with unlimited text and calling. In the long run, though, such a move seems likely, and if it can boost overall pricing, then AT&T could continue its recent run of new multiyear highs for its stock.

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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 JPMorgan Chase. 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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