Big Ben Juices the Dow Again

The steroid era in baseball may be over, and Lance Armstrong may never again wear a yellow jersey, but when it comes to a quick fix, the stock market remains the place to go. U.S. stock markets soared at today's open following last night's comments from Federal Reserve Chairman Ben Bernanke that the central bank remains committed to "highly accommodative monetary policy for the foreseeable future."

Having suffered a correction, the markets are climbing in an apparent reflection of investors' belief that they overreacted to hints that quantitative easing would come to an end. As of 10:55 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI  ) are up 135 points, or 0.88%, leaving the average just shy of its all-time record high close set in May. The S&P 500 and Nasdaq have posted even larger gains of more than 1%, putting the S&P close to a new high as well.

Believe what you will about the long-term effect of the Fed's actions, but today, you can see from the Dow's strongest performers how well the market is taking the news. Economically sensitive Caterpillar (NYSE: CAT  ) and Alcoa (NYSE: AA  ) are both up sharply today as investors weigh the impact of further stimulus on the U.S. economy -- and it seems they've decided that faster U.S. growth should lead to further global activity as well. Yet that's far from a foregone conclusion. For Caterpillar, the recent recovery in gold and silver prices could spark renewed interest from mining companies for heavy equipment, but price levels remain far below where they were earlier this year. Alcoa, meanwhile, needs greater evidence not only of renewed construction activity but also of constraints on aluminum supply from its competitors, especially in China. A boost in activity could actually spur Chinese aluminum-producers to make more of the lightweight metal, extending glut conditions and hurting Alcoa's long-term profit outlook.

Disney (NYSE: DIS  ) also finds itself among the top winners in the Dow, climbing 1.9%. Despite concerns about the box-office underperformance of the company's Lone Ranger release, former CEO Michael Eisner reminded investors in an interview yesterday that one-time mistakes have little effect on the company's long-term prospects. With so many potential future blockbusters from Marvel and Lucasfilm, as well as Disney's traditional areas of strength, even the movie division in particular won't suffer more than a tiny bump in the road from Lone Ranger's shortfall.

Finally, outside the Dow, Apollo Group (NASDAQ: APOL  ) has soared nearly 8% after its University of Phoenix had its accreditation renewed. With accreditation concerns having weighed on other stocks in the for-profit education industry, the positive news helped bolster shares throughout the sector. The industry still faces scrutiny from regulators over delinquent student loans and poor graduation rates, but today's moves give Apollo and its peers a shot in the arm following their terrible stock performance in the past few years.

The Dow has some great long-term stock prospects, but you need to know where to find them. The Motley Fool's brand-new special report has all the details on the most promising Dow stocks. It's absolutely free, so simply click here now and get your copy today.


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

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: 2532265, ~/Articles/ArticleHandler.aspx, 12/18/2014 10:40:42 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