Why the Dow's Starting December Mixed

As we enter the final month of 2012, the stock market's action today shows the tug-of-war between competing priorities for investors. On one hand, good news on the international front fed optimism as Spain finally made a request for bailout assistance and Greece took a step forward in buying back outstanding debt. Yet despite encouraging levels of activity from purchasing managers in China, factory activity levels in the U.S. unexpectedly dropped. That sent the Dow Jones Industrials (DJINDICES: ^DJI  ) down from an early rise to a drop of 30 points by 11 a.m. EST.

Lately, two of the Dow's tech giants, Hewlett-Packard (NYSE: HPQ  ) and Intel (NASDAQ: INTC  ) , have been vying for investors' attention as they both strive to remain relevant in a rapidly evolving technology industry. HP gained 1.3% this morning as shareholders continue to consider whether its recent plunge, which followed a multibillion-dollar writedown of its Autonomy acquisition, is truly a value opportunity. As Fool contributor Anders Bylund detailed last Friday, details of the entire episode continue to surface, confirming the doubts many analysts had about the deal all along.

Meanwhile, Intel is flat after having been up strongly earlier in the session. By all standard value measures, Intel looks extremely cheap as it maneuvers to become one of the top-yielding stocks in the Dow. Yet the stock trades at 52-week lows precisely because investors aren't convinced that Intel isn't in a state of perpetual decay. Intel needs to push out advances on the mobile side of the business to convince shareholders that the stock deserves full value for its current earnings.

Finally, Alcoa (NYSE: AA  ) fell about 0.4%. With both Alcoa and Caterpillar (NYSE: CAT  ) being especially sensitive to economic fluctuations given their heavy-industrial focus, it's not surprising to see the two stocks mixed today, with Caterpillar climbing a bit. Both companies are increasingly dependent on economic activity not just in the U.S., but throughout the world, so it's important to note that when U.S. data is in conflict with what's happening elsewhere across the globe, you can't simply expect Caterpillar and Alcoa to sell off. In the longer term, their success relies not only on macroeconomics, but also on their particular abilities to execute and take advantage of whatever conditions they face.

Winners from global strength
Even when the U.S. economy doesn't entirely cooperate, global growth is essential for most big U.S. multinationals. For instance, Caterpillar leads its industry with quality products, an extensive service network, and unparalleled brand strength. But do recent signs of growth make Caterpillar a buy after its recent sell-off? Read all about Caterpillar's strengths and weaknesses in our brand-new report. Just click here to access it now.


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