Today was a tale of two markets. On one hand, you had the Dow Jones Industrials (INDEX: ^DJI ) climb strongly, ending the day up 83 points to finish above the 13,000 mark. On the other, you had the Nasdaq Composite (INDEX: ^IXIC ) close down three-quarters of a percent, as several big companies listed on the Nasdaq posted significant losses. Overall, the S&P 500 was much closer to unchanged than either the Dow or the Nasdaq, as the ongoing tug-of-war over the fiscal cliff shows no signs of ending soon.
But good news from several Dow components helped give the average an edge over broader market measures. Bank of America (NYSE: BAC ) soared more than 5.5% to finish at a new 52-week high. Investors are pleased with CEO Brian Moynihan's enthusiasm about the bank's future prospects, as his Project New BAC starts to turn away from capital raising and cost cutting to focus instead on profit-making opportunities. With a goal of increasing mortgage lending, B of A is returning to its roots, which is an exciting milestone on the road to recovery for the banking industry.
Travelers (NYSE: TRV ) also weighed in with a nearly 5% gain. Investors have been concerned about the potential impact of Hurricane Sandy on insurance companies, but Travelers came out with a damage figure that gave shareholders comfort that the storm wouldn't hurt the company too badly. After reinsurance reimbursements, Travelers should face about $650 million in after-tax losses from the storm. That equates to roughly $1.70 per share, which is a bit more than analysts have reduced fourth-quarter earnings estimates.
Finally, Caterpillar (NYSE: CAT ) bulldozed its way to a 2.25% rise. As Fool analyst Brendan Byrnes noted today, Caterpillar is always vulnerable to falling prices in the commodity space. Yet with a huge growth opportunity in China and signs of a potential rebound from the Chinese economy, Caterpillar is positioning itself to take maximum advantage.
Look for economic strength
Many companies in the Dow rely on a healthy economy for their prosperity. Caterpillar is definitely one of them, with construction and mining activity being essential to its success. Given the troubles that the global economy has seen lately, is Caterpillar a buy right now? Find out by reading all about Caterpillar's strengths and weaknesses in our brand new research report. Just click here to access it now.