Stocks Make Big Gains for All the Wrong Reasons

U.S. stock markets are up again today thanks to the promise of stability in China. Monday's fears of skyrocketing interest rates have been eased by four straight days of falling rates in China and promises from government officials that there won't be a liquidity crisis. Investors are looking past bad news in the U.S., where the Department of Commerce said first-quarter GDP growth was only 1.8% -- significantly lower than the previous estimate of 2.4%. As of 3:20 p.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has gained 1.15%, while the S&P 500 (SNPINDEX: ^GSPC  ) is up 1.14%.

Boeing (NYSE: BA  ) is among the companies leading the charge, rising 2.3% today. Competitor Bombardier delayed a flight of its CSeries jet for the second time, this time pushing the test back until July. Bombardier is targeting the market dominated by Boeing's 737, so the delays, along with Bombardier's failure to notch any orders at the Paris Air Show, are good for Boeing. Boeing will report earnings on July 24, and investors will likely get more information about the impact of delayed orders for the 787 Dreamliner.  

Alcoa (NYSE: AA  ) is the lone big loser on the Dow today, falling 2.3%. Slower-than-expected GDP growth has had many effects on trading today, and they all seem to be bad for Alcoa. If the economy doesn't grow quickly enough, the Fed may keep its easy-money policies in place, which may have investors excited today but is not necessarily good for Alcoa: The company benefits more from a growing economy than from easy money.

The stock market has become something of a logic vacuum lately, cheering stimulus and booing the Fed's bullish predictions last week. Long-term investors should be hoping for stronger growth and fewer stimuli. It's a good thing earnings season is around the corner: Perhaps stocks will begin to trade based on fundamentals, rather than macroeconomic speculation.


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.

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: 2511416, ~/Articles/ArticleHandler.aspx, 9/17/2014 11:57:41 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...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement