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Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The stock market, in all its chaotic, unpredictable ups and downs, doesn't always send a clear message, a takeaway for the individual investor. Today was different. For anyone who remained skeptical about China's influence over U.S. markets, Wall Street exposed that skepticism as unfounded Monday. Shares in American businesses roared higher across the board Monday, as China reported a 7.2% yearly jump in exports last month. The Dow Jones Industrial Average (DJINDICES: ^DJI ) traded higher all day, adding 140 points, or 0.9%, to end at 15,063.
Predictably, Caterpillar (NYSE: CAT ) surged 2.6% on the Chinese data. Stock in the equipment maker is inextricably linked to the health of China, the world's second-largest economy by GDP. Caterpillar shares have struggled this year, losing about 4% as concerns about the country's ebbing growth spread. China, which hadn't grown GDP by less than 9% per annum since 2001, suddenly expanded by just 7.8% last year.
Property and casualty insurance provider Travelers (NYSE: TRV ) tacked on 2.1% Monday, as investors couldn't ignore the stock's low P/E ratio, which sits just over 10 at current levels. While there wasn't one compelling catalyst driving shares higher, the financial sector was one of five posting at least 1% gains today. While no one expects exponential returns from the company -- its sales have remained around $25 billion annually for years -- the predictability and the 2.5% dividend sell themselves to more cautious investors.
Alcoa's (NYSE: AA ) stock, like Caterpillar's, is highly sensitive to economic developments in the Far East. The aluminum producer ended with 2% gains today, encouraged by what continuous growth in Chinese industry might mean for aluminum demand. That said, China is not the end-all-be-all for Alcoa; if global aluminum prices don't start recovering, it won't matter how swimmingly the Chinese economy is doing.
On rare days, all 30 Dow stocks move the same direction. Verizon Communications (NYSE: VZ ) tainted the purity of Monday's broad gains, stubbornly bucking the trend with a 0.9% loss. Stock in the telecom has mostly lost ground since announcing its massive $130 billion acquisition of Vodafone's stake in Verizon's U.S. wireless division. The megadeal, while likely to be an astute long-term decision, is a headache to finance in the short term, and Verizon may have to essentially flood the bond market to pay Vodafone.
There's good reason to believe that the most successful investors over the next few decades will be those with exposure to China's massive and growing population of domestic consumers. While Caterpillar and Alcoa offer exposure to mining and materials, there are few things that Chinese consumers are likely to purchase with more enthusiasm than cars and trucks. In this brand-new free report, our analysts get out in front of this trend by identifying two automakers that are poised to surge along with China's middle class. If you want to be among the smart investors who get rich from this growing trend, then you'd be well advised to instantly download our free report on the topic by clicking here now.