IBM Helps Drive the Dow Jones' Jump Today

The Dow Jones Industrial Average (DJINDICES: ^DJI  )  was up 163 points, to 16,229, as of 1:30 p.m. EDT after multiple positive reports on economy.The S&P 500 (SNPINDEX: ^GSPC  ) was up 16 points to 1,857.

All but two of the 30 Dow stocks are up following positive U.S. economic data and continued calm after Crimeans voted overwhelmingly to secede from Ukraine in favor of joining Russia.

Report

Period

Result

Previous

Industrial Production

February

0.6%

-0.2%

Capacity Utilization

February

78.8%

78.5%

NAR Home Builders Index

March

47

46

The one to pay attention is the Federal Reserve's Industrial Production and Capacity Utilization report. Industrial production increased 0.6% in February. That was up from January's 0.2% drop, which was revised upward from a 0.3% drop. It was also better than analyst expectations of a 0.2% increase. The jump in industrial production suggests that the U.S. slow economic recovery is still on track and that the slowdown over the winter was the result of the terrible weather and not an overall slowing of the economy.

The other half of the report is capacity utilization, which rose to 78.8% in February from 78.5% in January. The U.S. economy still has significant unused industrial capacity, which works to keep prices growing slowly. Prices generally increase as the nation's capacity utilization increases, as businesses must pay up for production or build new factories.

The Fed has been challenged by low inflation, well below its target of 2% to 2.5%. At the two-day meeting5that begins Tuesday, the Federal Open Market Committee is expected to taper its asset purchases by another $10 billion a month, to $55 billion.

IBM on the rise
IBM (NYSE: IBM  ) , which was up 1.87% to $185.65, to take the No. 2 Dow spot behind Boeing. Other stocks have risen nearly as high, but IBM's stock large price means it has a proportionally larger effect on the Dow, second only to Visa. IBM has trailed the Dow over the past year by nearly 20%; it is one of the Dow's five most shorted stocks, as investors fear the company has no real competitive advantage. Warren Buffett has been one investor taking advantage of IBM's weakness and continues to add to his holdings of Big Blue.

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  • Report this Comment On March 18, 2014, at 5:31 AM, Interventizio wrote:

    IBM heavily shorted? I didn't notice that. Good luck to shorties in betting against Buffet.

    I've five and take 17% of my portfolio in IBM and I ain't sorry.

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