How These Stocks Could Take the Dow to 16,000

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The Dow Jones Industrials (DJINDICES: ^DJI  ) may have finished just short of the 15,000 mark, but its intraday push above the key landmark reawakened hopes that the four-year-old bull market might still have further to run. With the Dow, the S&P 500, and the small-cap Russell 2000 all at record highs, the prospects for the U.S. stock market are looking up. Yet, with the Dow having passed one intraday milestone today, what would it take for the market to reach 16,000?

For the Dow to make another run higher of nearly 7% to get to 16,000, it'll need support from the same stocks that led it higher today. Caterpillar (NYSE: CAT  ) soared 3.5%, the top gainer in the Dow, as investors applauded the prospects of stronger economic activity in the company's key U.S. market. Yet, even with today's gains, Caterpillar remains more than 10% below its recent highs, reflecting anxiety about the company's other key market: China. Fellow industrial component Alcoa (NYSE: AA  ) , which climbed almost 2% today, faces the same general issue, as sluggishness in the Chinese economy has contributed to weak aluminum prices industrywide that have held down profits.

Clearly, strength in the U.S. economy will carry over somewhat to China, given the importance of the trade relationship between the two nations. But, as the Chinese economy grows, its fluctuations become more independent of movements in other markets, with stronger connections to internal conditions. As long as fears about a property bubble linger in China, it'll be hard for more favorable economic conditions elsewhere to have a positive effect on the country's prospects. If China gets its act together, however, it'll be Caterpillar and Alcoa that help lead the way higher for the Dow.

That isn't the only scenario under which Dow 16,000 is possible. 3M (NYSE: MMM  ) , which gained 1.7% today, has been trying to reawaken its spirit of innovation, and even though its challenges haven't kept the stock from hitting new all-time highs of its own, 3M has a lot more growth potential if it can return to its innovative roots. If the company can get back on track, then it could be an important part of a Dow advance, especially given its high share price and its effect on the price-weighted Dow.

Finally, Boeing (NYSE: BA  ) rose 1.7% today after announcing that its X-51A experimental military aircraft reached Mach 5 for three-and-a-half minutes, the longest such flight ever. Advances like this point to Boeing's opportunity not just in commercial aircraft, but throughout the aerospace industry, and even though defense budget cuts have dampened expectations for military expenditures, useful products like the X-51A could bring on must-have innovations that could add to Boeing's potential. The broad impact that Boeing has on other Dow components that make parts and supplies for its aircraft could amplify the effects of new discoveries, pushing the Dow still higher.

All of these stocks could help the Dow set new records, but out of all of them, Boeing arguably has the biggest opportunity. To learn more about whether Boeing has what it takes to meet the challenge, we've prepared a premium research report on the company, in which two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Read/Post Comments (0) | Recommend This Article (6)

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.

Compare Brokers

Fool Disclosure

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: 2408211, ~/Articles/ArticleHandler.aspx, 9/26/2016 6:52:37 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...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:35 PM
^DJI $18094.83 Down -166.62 -0.91%
AA $9.68 Down -0.08 -0.82%
Alcoa CAPS Rating: ***
BA $130.57 Down -1.21 -0.92%
Boeing CAPS Rating: ****
CAT $82.37 Down -0.07 -0.08%
Caterpillar CAPS Rating: ***
MMM $175.95 Down -1.44 -0.81%
3M CAPS Rating: ****