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Wall Street watchers may have been getting dizzy today as the Dow Jones Industrial Average (DJINDICES: ^DJI ) moved more than 100 points for the third day in a row. Today, however, two strong economic reports sent the blue chips higher, as the index gained 180 points, or 1.2%. Initial unemployment claims beat expectations with last week's new jobless tally hitting just 334,000, compared to the 350,000 analysts had expected, and 346,000 the week before. The figure helps increase confidence that the job market is improving after last week's new jobs numbers for May also beat expectations.
May retail sales also came in ahead of expectations, jumping 0.6% versus the consensus estimate at 0.3%. The total was the fastest growth rate in three months, and a 4.3% increase over a year ago, indicating that consumer spending continues to improve despite government spending cuts and a higher payroll tax.
Caterpillar (NYSE: CAT ) took the cake today among Dow stocks, gaining 2.3%, as the construction-equipment maker bumped up its quarterly dividend 15%, to $0.60, or a 2.9% yield. It was the company's third consecutive annual dividend increase and, on a bullish day, that was enough to push the macro-economically sensitive stock up over 2%. Caterpillar has been one of the worst-performing on the Dow this year as it has actually fallen 5% in 2013. Given its sluggish performance recently, the stock may be due for a gain.
Merck (NYSE: MRK ) and Pfizer (NYSE: PFE ) were not far behind as the two drug-makers also gained 2.3%, likely in response to a $2.15-billion settlement earlier this week that pit Pfizer and Takeda against Teva and Sun Pharmaceuticals, which violated Pfizer's and Takeda's patents on Protonix, a heartburn reliever. Sun shares were down 6% today. The settlement is seen as a win for the pharma giants, as it will be the largest sum paid out in damages for so-called "at-risk" generic drug launches, in which companies like Teva begin selling generics while the patent is still under litigation, which can take years to resolve The punishment in this case is a steep one, and should help dissuade generic drugmakers from jumping the gun in the future.
Just two Dow stocks declined, one of them being Dupont (NYSE: DD ) , which fell 0.7%, as the seed maker lowered its EPS forecast due to a wet spring, which should reduce harvests and negatively affect its product mix. The company had previously projected EPS between $3.85 and $4.05, and now says it will hit the low end of that range, and that operating profits for the first half of the year will drop 10%. The analyst consensus for EPS this year had stood at just $3.89.
Tomorrow, look for the University of Michigan Consumer Confidence survey, which comes out 9:55 AM, just after the opening bell. A strong report could help keep today's momentum going. Analysts are expecting the index to hit 83.0, down from 84.5 in May.
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 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.