A trio of factors combined to send stocks northward Wednesday. The least surprising catalyst was Federal Reserve Chairman Ben Bernanke's testimony before Congress; any time that man speaks publicly, markets listen. Remaining stubbornly evasive, Big Ben simply vowed that the Fed would react to data in deciding the timeline for tapering stimulus efforts. Also not shocking was Wall Street's reaction to quarterly reports, as earnings season kicks into high gear.
But the most unique driver by far today was the impact a handful of hedge-fund bigwigs and institutional investors exerted on stocks today. The Dow Jones Industrial Average (DJINDICES: ^DJI ) rose 18 points, or 0.1%, to close at 15,470.
E.I. du Pont de Nemours (NYSE: DD ) ended as the surprise standout in the Dow, rocketing 5.3% higher on reports that Trian Fund Management's Nelson Peltz is building a major position in the chemicals company. DuPont shares reached a 13-year high on the news, although when financial journalist Andrew Ross Sorkin pressed Peltz on the issue at CNBC's Delivering Alpha conference, the activist investor merely said the word DuPont made him think of paint. Fascinating!
Bank of America (NYSE: BAC ) jumped 2.8% Wednesday for reasons most investors will find more relatable and straightforward: The company made more money than anyone really expected. Net income for common shareholders jumped 70% from the year-ago period, as major cost-cutting measures offset slow revenue growth. With toxic mortgage assets continuing to come off the books, the Charlotte-based bank is strengthening its balance sheet and paving the road for future success.
As for blue chip losers, Caterpillar (NYSE: CAT ) shares saw the power of a bearish hedge fund manager with a bully pulpit, as shares lost 1.7% following a badmouthing, courtesy of Jim Chanos at the Delivering Alpha conference. Chanos gained his fame and following after betting against Enron before the energy giant collapsed without a hint of grace or morality. He thinks that commodities prices are going to slump with a vengeance in the next few years, and Caterpillar's mining equipment business will crash as a result.
Lastly, shares of American Express (NYSE: AXP ) were down 1.8%, as shareholders anxiously awaited the credit card company's quarterly report after the bell. Not only was there apprehension over quarterly results, but the European Union is reportedly proposing a measure that would cap fees that card companies charge to retailers -- curbing AmEx's potential for growth in that continent.