Evening Dow Report: Deals, Durables Drive Dow Higher

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.

Today, the stock market closed early, but the Dow Jones Industrials (DJINDICES: ^DJI  ) still posted a full day's worth of gains, rising almost 63 points to finish at another all-time record high. Broader markets also rose modestly on the heels of a solid gain in durable goods orders that signaled continued strength in the economy going into 2014. Among the stocks with the greatest advances were DuPont (NYSE: DD  ) Microsoft (NASDAQ: MSFT  ) , and Caterpillar (NYSE: CAT  ) , each of which pushed higher by 1% or more.

Deals were part of the theme of the day, as Johnson & Johnson appeared ready to sell off its struggling Ortho diagnostics unit. The consummation of that deal might well have been behind DuPont's gains as well, with the chemical giant leading the Dow's gainers with a jump of 1.7%. DuPont is also looking to separate a struggling business unit, with plans to spin off its Performance Chemicals division by early 2015 in order to focus more squarely on its agricultural business. Like J&J, DuPont stands to gain from divesting lower-margin, weaker-performing units in favor of its highest-growth prospects, and investors are excited about those prospects going forward.

Microsoft climbed 1.25% as investors continue to see the tech giant and some of its peers as strong value candidates. Even after the stock's gains of nearly 20% since early September, Microsoft still trades at just 14 times trailing earnings. Microsoft's future earnings growth might be somewhat in doubt, but bullish investors hope that whoever replaces Steve Ballmer as Microsoft's new CEO will be able to restructure the mammoth company's business operations and find ways to stoke faster growth.

Caterpillar rose more than 1%, hitting its best level since March. Favorable durable-goods orders point to more activity in the industrial sector of the economy, and greater industrial activity points in turn to potentially higher demand for Caterpillar's heavy equipment. Moreover, with signs of improvement in key international markets as well, Caterpillar could well be another example of how poor performers one year can end up at the top of the heap the following year.

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  • Report this Comment On December 25, 2013, at 9:34 AM, funfundvierzig wrote:

    "... DuPont stands to gain from divesting lower-margin, weaker-performing units in favor of its highest-growth prospects,..."

    But in spinning off its chemicals, the much shrunken and shrinking DuPont Company will lose 20% of its yearly revenue, and nearly a third of its earnings, 29% to be exact based upon full year 2012. It will take a long time and lot of touted "growth" to make up that gaping gap and return to the same level of sales and profits. ...funfun..

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Related Tickers

8/29/2014 4:30 PM
^DJI $17098.45 Up +18.88 +0.11%
CAT $109.07 Up +0.42 +0.39%
Caterpillar, Inc. CAPS Rating: ***
DD $66.11 Down -0.04 -0.06%
E.I. du Pont de Ne… CAPS Rating: ****
MSFT $45.43 Up +0.55 +1.23%
Microsoft CAPS Rating: ***