Why the Dow's Ignoring Stronger Consumers

When big issues like the debt ceiling debate and earnings season vie for investors' attention, economic data often gets overlooked. That seems to be the story today, as a 0.2% drop in monthly producer prices and a better-than-expected 0.5% gain in retail sales seem to point to improving economic conditions for consumers. Yet pockets of weakness still exist, with many high-profile retail names struggling to survive. That tug-of-war went to the bears today: The Dow Jones Industrials (DJINDICES: ^DJI  ) have fallen 27 points as of 10:55 a.m. EST.

Still, looking at the Dow, stocks that thrive on economic optimism were among the few winners this morning. Caterpillar (NYSE: CAT  ) , for instance, rose 0.7%, as the construction equipment giant is poised to profit regardless of whether growth comes from the U.S., China, or elsewhere around the world. If prolonged wrangling on government economic issues slows down the economy, Caterpillar will suffer somewhat, but a pullback in the shares could provide a buying opportunity.

Sticking with the consumer theme, Home Depot (NYSE: HD  ) gained about half a percent. The home-improvement retailer has been counting on consumers to spend on home furnishings and renovation projects, and Home Depot really needs the recent strength in the housing market to continue in order to justify the big run higher in its stock price.

Outside the Dow, QLogic (NASDAQ: QLGC  ) has climbed 7% following a positive preliminary outlook for its fiscal third quarter. With revenue and adjusted earnings now expected to finish above the range the company previously gave, a long-awaited recovery for network infrastructure stocks could finally be on the way.

Finally, Dell (UNKNOWN: DELL.DL  ) has gained another 1.5%, following up on yesterday's big jump after reports surfaced that the company might be open to a potential buyout from a private-equity firm. As more analysts look at various players in the private-equity world, it's important to put any potential deal in perspective: Despite the big rise in recent days, long-term shareholders have suffered huge losses from Dell over the years.

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