Dow Cashes In on Financials' Gains

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Yesterday was a great one across the board for stocks and indexes. But today, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is struggling to hold on to the gains. While the index's biggest dip this morning only took it down 33 points, the biggest peaks have only just reached yesterday's close -- with the index sitting at a 2-point gain at 11 a.m. EDT. Gloomy news from home and abroad may be quieting the bull market that rode through Wall Street yesterday.

Across the pond, the eurozone is headed back into troubled waters. GDP figures showed that the French economy is back in a recession for the first time since 2009, while Germany had only a modest increase in the first quarter. The eurozone economy shrank, with the recent data showing the longest recession for the collective countries since the currency was introduced in 1999. Without much help from the labor market, which reached record unemployment of 12.1% in March, there is little chance for a turnaround before next year.

Closer to home, a bevvy of industrial data was released this morning, which showed disappointing figures. Producer prices fell in April as gas and food costs dropped sharply. The 0.7% drop in April is the largest recorded since 2010, with continued drops expected to follow. Cutbacks in U.S. manufacturing resulted in industrial production declines of 0.5% -- the largest decline in eight months. Business investments are starting to slow down as the country prepared for the across-the-board federal budget cuts to take hold. An increase in hiring and progress from overseas markets could help bring manufacturing back online, but neither is expected to happen in the very near future.

Take it to the bank
Financials are the solid gainers again this morning, with American Express (NYSE: AXP  ) leading the way. The personal finance company is up 1.5% just after 11 a.m. EDT. The company may be getting an added boost from the news that Paymill, a digital payment service, now allows merchants to accept more credit cards -- including American Express. Though there are still plenty of merchants that will not accept the cards -- largely due to higher processing fees -- expansion of the technological capabilities to accept the card may open more doors for the credit card company.

JPMorgan (NYSE: JPM  ) is also on the rise again this morning. Up 1.26% so far in trading, the company is gaining despite some major headwinds. With a shareholder vote approaching in the coming weeks, some investors may be concerned about a threat from CEO and Chairman Jamie Dimon that he will leave if his dual roles are split following the vote. Some analysts have already estimated a 10% drop in the stock if Dimon leaves. But with support for Dimon from the board and others, there may be little for investors to worry about.

Bank of America (NYSE: BAC  ) was one of the big winners yesterday, with a gain of 2.8%. Today the bank is a little slower on the uptake, with a 0.62% rise so far. Though there hasn't been much news for the bank, it was certainly benefiting from the overall bullish nature of the market yesterday. Today, the banks overall may be getting a boost from news that home builders' confidence in the market is rising. Despite higher costs for construction materials, confidence was boosted three points by increasing home prices for single-family homes. For Bank of America, this is great news as the bank continues to try to grab more market share within the mortgage origination business. The track hasn't been easy, as B of A must compete with JPMorgan and Wells Fargo, which had a combined share of the market of 39% as of 2012.

Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
AXP $64.04 Up +0.67 +1.06%
American Express CAPS Rating: ****
BAC $15.65 Up +0.49 +3.23%
Bank of America CAPS Rating: ****
JPM $66.59 Up +0.94 +1.43%
JPMorgan Chase CAPS Rating: ****