This Bank Is Leading the Dow Higher

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up after a positive report on manufacturing activity in the U.S. As of 1:15 p.m. EDT, the Dow was up 25 points to 14,999. The S&P 500 (SNPINDEX: ^GSPC  ) was up 6 points to 1,620.

There were two U.S. economic releases today.

Report

Period

Result

Previous

CoreLogic home prices

May

12%

11%

Factory orders

May

2.1%

1.3%

The one to pay attention is factory orders. It's well known that home prices were up in May; the big question is whether they will continue their rise now that mortgage rates have jumped. The Department of Commerce reported factory orders rose 2.1% in May, slightly above analyst expectations of 1.9% growth and above April's 1.3% growth. Excluding transportation, new orders were up just 0.6%. Durable goods orders were up 3.7% while nondurable goods were up 0.7%. The durable goods growth is an especially good sign of a resurgent economy as it shows that consumers and businesses are investing in appliances, cars, and other purchases that could be put off if the economy were doing poorly.

The one big question on the market's mind is "is the unemployment situation improving?" We will find out more when ADP releases its private sector jobs report tomorrow and when the Department of Labor releases the nonfarm payrolls report Friday. The market is currently being sustained by the Federal Reserve's purchasing of $85 billion worth of long-term assets each month, which the Fed has said will continue until inflation picks up or the jobs market improves to 6.5%-7% unemployment. If the jobs report comes in better than expected, the market may drop as that would mean that the Fed will taper sooner than expected.

One company that won't mind higher rates is today's Dow leader, JPMorgan Chase (NYSE: JPM  ) , which is up 2.01% to $53.16. The bank is up today after being upgraded by Raymond James from "outperform" to "strong buy" with a target price of $64, as the analyst expects the bank's earnings to be better than they previously expected. We will get some idea of how the bank is doing after it reports second-quarter earnings next Friday. While the bank has faced some short-term challenges and now faces another with the rise in interest rates, these will all be nothing more than short-term headwinds for the bank. In the medium term, higher rates are better for banks as they can lend out their deposits and make a higher return on those deposits.

Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.


Read/Post Comments (0) | Recommend This Article (3)

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: 2520834, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:46:15 AM

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...


Advertisement