An Upbeat Fed Sends Stocks Higher

The all-important Federal Reserve meeting has concluded, and the central bank had generally positive things to say about the economy. It sees unemployment falling to between 7.3% and 7.5% this year, which is down from 7.7% in February. The Fed also projects growth of 1.3% to 1.7% for the economy as a whole. It will continue its bond-buying programs and won't raise rates until unemployment reaches 6.5% or inflation reaches 2.5%. Add it all up, and investors are cheering the news, pushing the Dow Jones Industrial Average (DJINDICES: ^DJI  ) 0.42% higher and the S&P 500 (SNPINDEX: ^GSPC  ) 0.68% higher near the end of trading.

All but four of the 30 Dow components moved higher today, led by a strong reaction from financial-services companies American Express and Bank of America (NYSE: BAC  ) , which gained 1.3% and 0.9%, respectively. The two things financial services need are a growing economy and stable banking policy, which is what they'll get for the next few years, by the looks of it.

Merck (NYSE: MRK  ) is up 1.2% after announcing the sale of potential Parkinson's treatments to Cerecor. The company is looking into a variety of drugs to treat the disease, and this will add to the list of candidates for clinical development. Exact terms of the deal weren't disclosed, but Merck will be eligible for milestone payments and royalties if any of its treatments are approved.

On the flip side, Caterpillar (NYSE: CAT  ) is lagging the Dow by a wide margin, falling 1.6% after reporting sales figures. During the most recent three-month period, dealer sales fell 13%, compared with a 4% drop in the January period. This means February was an awful month, resulting in a 26% decline in sales in Asia-Pacific and 12% in North America. Infrastructure and mining spending just isn't what it used to be, and Caterpillar is caught with too much inventory and tough comparisons. Now is not the time to be jumping onto this bandwagon.

Nevertheless, Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it some solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in The Motley Fool's brand-new report. Just click here to access it now.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2323629, ~/Articles/ArticleHandler.aspx, 12/18/2014 5:24:51 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement