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Dow Beats Initial June Swoon

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Though it's had its share of ups and downs this morning, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has kept its feet firmly in positive territory. Some worry that the dreaded "June Swoon" may take hold, since the markets have historically underperformed in the month of June, to the tune of a 0.1% decline. And though some discouraging economic data started the morning, some of the index's component stocks are shouldering the burden and leading the way higher. Though its rise has been modest so far in trading, the Dow is up 32 points as of 11:30 a.m. EDT.

Manufacturing a recovery
This morning's unexpected report of a contracting manufacturing market sent a ripple through the market, leading to the Dow's biggest drop in trading. The contraction in activity is the first the economy has seen in six months, with the index of national factory activity falling to 49.0. While analysts had expected the index to stay flat with April's 50.7, the more worrying issue is a reading below 50, the level at which expansion reverts to contraction. The last time the index was below 50 was in November 2012, just after Hurricane Sandy.

Another report this morning showed a small increase in construction spending, though the 0.4% rise was only half of estimates. Business spending helped offset declines in private homes and the public sector. While governmental cutbacks have hurt this statistic, private nonresidential building is on the rise, as well as utilities construction. Construction of residential properties increased over the month, though improvements in private homes slowed that segment's growth.

Leaders and laggards
Merck (NYSE: MRK  ) is at the top of the class this morning with a 5.19% gain following some extremely encouraging news about its latest experimental drug, lambrolizumab. Aimed at unleashing the powers of a patient's own immune system, the drug disables the immune system cells' prevention method that curbs its attack on cancer cells -- a protein called the programmed death 1 receptor, or PD-1. Merck's drug has shown a 38% rate in tumor reduction in patients with advanced melanoma, and up to 52% in patients who received the highest dosage of the drug. Though the patients have not undergone the trial for a long enough period yet, the results are attracting attention for matching the current treatments from two Bristol-Meyers Squibb (NYSE: BMS  ) drugs, Yervoy and nivolumab, with potentially milder side effects. The news is great for Merck investors, as the company has only played a small part in oncology treatments to date.

Banks are headed lower this morning, with Bank of America (NYSE: BAC  ) leading the laggards with a 3.07% drop this morning. Today is the big day for B of A as it heads back into the courtroom for a hearing on its $8.5 billion settlement with investors. The court will determine if the settlement is approved or rejected. If it's rejected, the bank could potentially be on the hook for $60 billion. Though the settlement is supported by investors like BlackRock and Goldman Sachs, opposition is coming from AIG (NYSE: AIG  ) , which has stated that the settlement is too small for the outstanding claims against the bank. AIG has a separate case against Bank of America in the courts, with a $7 billion claim based on losses from insured mortgage-backed securities.

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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