Why the Dow Rose for a Second Straight Day

The Dow Jones Industrial Average (INDEX: ^DJI  ) managed to keep its momentum going today after a 200+ point gain on Friday, spending most of the day solidly in the black. Helping push up markets today was the German government’s backing of the bond-buying program promoted by the European Central Bank. Most of the major European exchanges rose on the day, as well.

A slew of mostly positive earnings reports from companies outside the Dow also helped push up markets, in general. Overall, it’s been a solid earnings season; according to S&P Capital IQ, 65% of the 407 S&P500 companies that have reported earnings have beat expectations, with an average of 8.6% earnings per share surprise.

Here’s how all three major U.S. indices fared on the day:

Index

Change

Ending Value

Dow Jones Industrial Average 21.34 [0.16%] 13,117.51
Nasdaq 22.01 [0.74%] 2,989.91
S&P 500 (INDEX: ^GSPC  ) 3.24 [0.23%] 1,394.23

As is often the case with the Dow advancing mainly on positive macroeconomic news, Bank of America (NYSE: BAC  ) , the Dow’s most volatile stock, was also the biggest gainer, rising 2.8%. B of A has regained its title as the biggest gainer of the year, as well, and has now advanced over 37% in 2012 alone.  

Outside the Dow, Best Buy (NYSE: BBY  ) was in the news today, as the company’s founder, Richard Schulze, offered to buy the company and take it private. Schulze said he would offer between $24 and $26 per share, a premium of 36% on the low end of the range from Friday’s closing price. The stock rose 13% on the news, though it closed at around $20 a share, well below the price of the offer, and indicating that many investors remain skeptical that Schulze will be successful in taking the company private.

Knight Capital (NYSE: KCG  ) continued its roller coaster ride today, this time falling more than 24%. The company was responsible for the trading glitch last Wednesday that flooded the market with incorrect trades. The company announced today that firms will buy 2% of convertible preferred stock in a $400 million deal that was needed to save the company. The deal will heavily dilute current shareholders. 

As evidenced by Bank of America’s nearly 3% move today on no real news, it can be very difficult to make sense of how to value the stock. Our top banking analyst has dug into the company and its so-called "black box" balance sheet, compiling an in-depth premium research report with the answer to the question: Is Bank of America a buy, sell, or hold? Simply click here to get access to this premium report.

Brendan Byrnes owns no shares of any company mentioned above. The Motley Fool owns shares of Best Buy and Bank of America. The Motley Fool has a disclosure policy. We Fools may not 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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