Will the Dow's Morning Gains Fade Away?

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The stock market got off to a strong start this morning, with favorable news on pending home sales, a drop in jobless claims, and an upward revision to third-quarter GDP topping the economic headlines. Nevertheless, most investors' attention remains on negotiations over the fiscal cliff, with the president and the Speaker of the House having met last night in hopes of hammering out a solution. Until that happens, though, you can expect trading to remain choppy, and this morning's action bears that out. After rising as much as 75 points earlier in the session, the Dow Jones Industrials (INDEX: ^DJI  ) had pared its gains to just 43 points as of 10:45 a.m. EST.

The biggest advancer in the Dow was UnitedHealth (NYSE: UNH  ) , which rose almost 2%. Despite having given a cautious outlook on its 2013 prospects, the company remains in an excellent position to make long-term gains as more of the Affordable Care Act's provisions take effect. The question, though, is whether gains in customer counts will offset added costs under the law, including a tax on premiums coming in 2014.

On the down side, Intel (Nasdaq: INTC  ) lost about 2%. Along with other tech giants Dell (Nasdaq: DELL  ) and Qualcomm (Nasdaq: QCOM  ) , Intel is talking to Japanese electronics giant Sharp about a possible investment. Intel certainly has the cash available, but it's uncertain how such an investment would improve Intel's long-term prospects to move more strongly into the mobile industry.

Finally, Caterpillar (NYSE: CAT  ) rose about 1%. The company is facing increasing competition from Chinese construction equipment manufacturers, but that isn't stopping Caterpillar from working to expand its business within China. A global playing field means that Caterpillar has to be ready to compete in all markets, and an improving U.S. economy will only help its efforts to sustain its leadership role in the industry.

Will the economy keep getting stronger?
Good news on the economic front is good news for Caterpillar, which is the market share leader in an industry in which size truly matters. But the stock has fallen recently on concerns about sustainability of global growth. Find out whether Caterpillar is a buy in our report on the industrial giant, in which you'll discover more about its quality products, extensive service network, and unparalleled brand strength. Just click here to access it now.

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