Today's market action confused a lot of people, who looked at continuing fiscal tension in Spain and some troubling numbers on German investor confidence as good reasons for the market to go lower. Instead, though, stocks rallied, with most analysts pointing to the Federal Reserve's meeting this week as a potential source of good news for stimulus-hungry stock markets. Although some hesitation came in near the end of the day to take the market off its highs, the Dow Jones Industrials (INDEX: ^DJI ) still ended 95 points higher, while the Nasdaq and S&P 500 both rose around 1%.
Bank of America (NYSE: BAC ) was the big winner, rising 4.5% on the session. As the most volatile financial stock in the Dow, B of A stands to gain the most from any further assistance from the Fed to goose the economy. With JPMorgan Chase CEO Jamie Dimon again boosting bank stocks on a second day of Congressional testimony, the entire sector seems to think that Fed action is a sure thing. Look for a huge reversal tomorrow if the Fed fails to deliver the goods.
In a more business-based move, Microsoft (Nasdaq: MSFT ) rose almost 3% as it announced that it's entering the tablet market. As Fool contributor Eric Volkman discussed earlier today, the new Surface doesn't appear to advance the ball very far from a technological standpoint, but it does do component makers a big favor by helping provide another potential source of demand for products that they've already developed. That may not do Microsoft any big favors, but it could be just what tech players need.
Finally, in the industrial space, both Caterpillar (NYSE: CAT ) and Alcoa (NYSE: AA ) were up about 2.4%. Both stocks have gotten hit hard in recent months by the resurgence of economic fears, with Alcoa trading near 52-week lows and Caterpillar having fallen more than 25%. As welcome as the gains may be, they're merely a drop in the bucket compared with the stocks' losses, and they probably won't stand unless the market gets the news it wants from the Fed.
Forget the Fed
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