Why the Dow Rallied Today

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Fresh off a poor showing in October, the Dow Jones Industrial Average (INDEX: ^DJI  ) started November on a positive note, advancing 136 points, or 1.04%, to close at 13,232. Investors applauded economic data released today that was better than anticipated, and markets showed gains from the opening bell forward.

According to payroll processing firm ADP, the U.S. tacked on an extra 158,000 private sector jobs in October, which bodes well for the official employment figures coming tomorrow from the Department of Labor. Previous expectations for private and public sector job gains in the month had been around 120,00. The index gauging consumer sentiment also rallied, to 72.2, its highest level in more than four and a half year.

In response to the bullish news, only three of the Dow's 30 components fell on the day. Wal-Mart Stores (NYSE: WMT  ) lost the most of the three, shedding more than 2%. The stumble could be due to the fact that rival (Nasdaq: AMZN  ) decided to start Black Friday sales an entire month earlier than usual. Fellow retailers Ross Stores (Nasdaq: ROST  ) and Target (NYSE: TGT  ) also reported underwhelming October same-store sales, so its possible that investors expect a similar disappointment from Wal-Mart. 

Starbucks (Nasdaq: SBUX  ) reported quarterly earnings after hours today, and shares rose sharply in subsequent trading. Not only did the coffee maker raise its quarterly dividend by 24%, but it increased its EPS guidance for 2013 from a prior forecast. It now expects EPS to come in between $2.06 and $2.15. 

Bank of America (NYSE: BAC  ) was the biggest winner in the Dow today, popping more than 4.5%. Positive macroeconomic news like we had today may have caused the surge; if the U.S. is indeed in the midst of a secular recovery, banks, in general, should rise with it.

Another company in the index that frequently rises and falls on the basis of macroeconomic indicators is machinery giant Caterpillar (NYSE: CAT  ) . Today was no different, and it was one of the top performers in the Dow, gaining more than 3.3%.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand new report. Just click here to access it now.

John Divine owns January 2013 call options on BAC stock. You can follow him on Twitter @divinebizkid, and on Motley Fool CAPS @TMFDivine.

The Motley Fool owns shares of, Bank of America, and Starbucks and has the following options: short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend and Starbucks. 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 Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2090460, ~/Articles/ArticleHandler.aspx, 10/22/2016 8:14:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:47 PM
^DJI $18145.71 Down -16.64 -0.09%
AMZN $818.99 Up +8.67 +1.07% CAPS Rating: ****
BAC $16.67 Up +0.11 +0.66%
Bank of America CAPS Rating: ****
CAT $86.33 Down -0.30 -0.35%
Caterpillar CAPS Rating: ***
ROST $63.40 Down -0.01 -0.02%
Ross Stores CAPS Rating: ****
SBUX $53.63 Up +0.04 +0.07%
Starbucks CAPS Rating: ****
TGT $68.23 Up +0.52 +0.77%
Target CAPS Rating: ***