Four days of losses have some wondering whether the stock market's rally is down for the count. Despite an overall rise in durable goods orders, most of the gains were due to the volatile transportation sector. Slowing trends in computers and industrial machinery were troublesome to stocks, sending the market lower in the opening minutes of trading. But don't count stocks out just yet, as the benchmarks staged a bounce-back rally to send the Dow Jones Industrials (INDEX: ^DJI ) up 35 points just after 10:45 a.m. EDT.
As you might expect on a Friday in summer, old patterns continued to repeat themselves. Leading the losers were JPMorgan Chase (NYSE: JPM ) and Caterpillar (NYSE: CAT ) , the same companies that have persistently remained linked to economic conditions both in the U.S. and around the world. The impact that falling capital spending in the economy will have on equipment-maker Caterpillar is obvious, but the connection for JPMorgan isn't quite as clear. Still, a decline in the demand for capital equipment reduces the need for businesses to borrow money for capital spending, potentially putting a dent in JPMorgan's loan business. In addition, Caterpillar's production cuts in China show the potential problems in the leading emerging-market economy as well.
Verizon (NYSE: VZ ) , however, gained more than 1%. The company got long-awaited approval of its $3.9 billion deal to buy spectrum from Comcast (Nasdaq: CMCSA ) and other big cable providers. With wireless spectrum increasingly important to strategic growth considerations, the deal will let Verizon move forward with plans to improve service. With wireless devices representing one of the biggest growth engines of the economy over the past several years, Verizon's success could be a key indicator of whether the U.S. can sustain at least modest economic growth in the years to come.
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