Why These 3 Stocks Are Leading the Dow's Surge

The Dow is up this morning, as Congress finally took action on the fiscal cliff late last night. As of 1:15 p.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 228 points, or 1.7%, to 13,332. The S&P 500 (SNPINDEX: ^GSPC  ) is also up about 1.7%.

Late last night the House of Representatives voted 257-167 to finally pass a bill to avert the fiscal cliff. This followed nearly two months of wrangling between House Democrats and Republicans. The bill breezed through the Senate with a vote of 89-8.

Economists had expected that going over the cliff would be disastrous for the U.S. economy as large spending cuts and a big tax increase automatically took effect on Jan. 1. While the bill signed last night lays out tax changes for the foreseeable future, which you can read about here, it only stalls the decisions on spending cuts. This will likely lead to another showdown in the near future.

With temporary good news about the fiscal-cliff negotiations, it's no surprise that the market is up.

Today's Dow leaders
Today's Dow leader is Hewlett-Packard (NYSE: HPQ  ) . HP is down 42% over the past year thanks to two $8 billion-plus writedowns, a declining market for PCs, and accusations of fraud against the former CEO of one of its acquisitions. Earlier this week the company announced in a filing that it continues to consider selling off underperforming divisions. With the stock so beaten-down, value investors are getting interested. The stock has rallied 15% in the past month as some investors begin to see HP as a steal.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP is rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor detour on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

Also leading the way are Caterpillar (NYSE: CAT  ) and Bank of America (NYSE: BAC  ) , up 4% and 3.3%, respectively. Both Caterpillar and Bank of America are cyclical companies that are largely dependent on the health of the economy. Averting the fiscal cliff for now is a plus for the economy, and as such, both stocks are up big.


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