The Numbers Behind the Dow's Recovery Today

As has often happened lately, the stock market has had some fairly strong swings today. After a small bounce at the open, the stock market got off to a slow start this morning, falling as investors grappled with conflicting information about the macroeconomic picture in the U.S. and around the world. The market moved strongly higher in the afternoon, and by around 2:45 p.m. EDT, the Dow Jones Industrial Average (INDEX: ^DJI  ) was up 58 points, just below the highs of the session.

Too often, though, investors focus only on the Dow rather than digging deeper into other financial markets. Let's take a look at some lesser-followed investments that also have an impact on overall portfolio performance:

  • Broader swaths of the stock market outperformed the Dow on the day. In particular, both the large-cap S&P 500 Index (INDEX: ^GSPC  ) and the small-cap Russell 2000 (INDEX: ^RUT  ) were up by a greater percentage than the Dow Industrial Average.
  • The most-followed parts of the commodity space were somewhat lower. Oil fell slightly to around $79 per barrel, while gold lost $15 per ounce to come in at $1,574. Yet energy- and resource-related stocks in the Dow were up sharply, with Chevron (NYSE: CVX  ) rising nearly 2% and Alcoa (NYSE: AA  ) up more than 1%.
  • As often happens on positive stock market days, bond prices fell slightly, raising the yield on the 10-year Treasury to 1.63%. Every bond investor should be aware of the danger of price declines that can result from even minor increases in interest rates.
  • Despite Europe's ongoing uncertainties, the value of the euro currency was almost unchanged, at about $1.25 to the euro. Unless the European summit comes out with definitive plans on how to solve the Continent's financial problems, many expect the euro to continue to be weak.

Today's performance points to a nicely positive day for stocks generally. In the broader context of the market's downward moves since the beginning of May, however, today's move upward doesn't appear to be a strong or lasting reversal of that downward trend.

Keep your focus
What markets do on any given day isn't nearly as important as what they do in the long run. If you want to get into stocks that can help you in the long run and prefer to stick with the Dow's blue chip favorites, let me suggest reading the Fool's latest special report, which recommends three Dow stocks dividend investors need. The report is absolutely free, so just click here and get your copy today.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. Motley Fool newsletter services have recommended buying shares of Chevron. 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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