It was more of the same today for the overall market -- and yet it wasn't.
The same factors that have been driving the market higher -- a very accommodative Federal Reserve, inexpensive stock valuations, and a slowly improving job market -- helped push the Dow Jones Industrial Average to an all-time record high. The long-antiquated index has risen around 120% since its lows set in 2009 and is markedly cheaper on a P/E basis than it was when it last hit an all-time record high in 2007.
The broader-market S&P 500 (SNPINDEX: ^GSPC ) , often seen as a broader and more diverse gauge of the U.S.'s health as it encompasses 500 of America's largest companies, fed on the overall optimism and finished the day decisively higher by 14.59 points (0.96%) to close at 1,539.79.
The biggest gainer of the day was trip advisory service TripAdvisor (NASDAQ: TRIP ) which trudged higher by 4.8%. If we've learned one thing about consumers since the recession, it's that they're generally unwilling to give up their need for a vacation. Expedia and priceline.com, through their earnings results, have shown exemplary growth in overseas markets despite stringent austerity measures and high unemployment levels plaguing Europe. This bodes well for TripAdvisor, which released a report last week chronicling the findings of its own survey that more Americans are expected to take a domestic flight sometime this year.
Trailing TripAdvisor but certainly not a forgotten name in today's broad-based rally was Micron Technology (NASDAQ: MU ) , which tacked on 3.9%. Just yesterday, brokerage firm Lazard downgraded Micron to "neutral" on what it perceived to be slowing DRAM demand in the coming months. Micron's success really is based on the fine line of increasing demand for flash memory being used in smartphones, tablets, and laptops being offset by increased commoditization, which keeps crushing prices. Micron is an extremely cyclical company and often not the best type of stock to hold for more than a few years, but I could see the potential for more upside from here.
Finally, Genworth Financial (NYSE: GNW ) found itself in the winners column yet again, rising 3.3% after Barclays upgraded mortgage insurers MGIC Investment (NYSE: MTG ) and Radian Group to "overweight" from "underweight" and set individual price targets of $8 and $14 on each company. Barclays notes that the mortgage insurance market is improving and should normalize by 2015. Genworth, which underwrites mortgage insurance, rose in tandem with the sector. However, I'd suggest exercising extreme caution with this sector. As noted by MGIC CEO Curt Culver, the company's risk-to-capital ratio is a dangerous 44.7:1 and it's expected to rise even further. While some values in mortgage insurance persist (e.g., Genworth), others like MGIC Investment are train wrecks that could sabotage your portfolio.
The finance companies you can trust
With so many of the big finance firms getting bad press these days, you may be inclined to stay away from the sector entirely, but that could be a huge mistake. In fact some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in The Motley Fool's exclusive free report. Just click here to keep reading.