Industrials Push Dow Jones Toward 17,000

Positive economic data out of Asia is pushing markets up around the world.

Jun 9, 2014 at 1:33PM

Industrials are pushing the Dow Jones Industrial Average (DJINDICES:^DJI) up to nearly 17,000 after better-than-expected economic data came out of Asia. As of 1:10 p.m. EDT the Dow was up 21 points to 16,946. The S&P 500 (SNPINDEX:^GSPC) was up four points to 1,953.

Industrial stocks are leading the stock market's rise today after China's exports report and Japan's GDP data came in above expectations.





Chinese exports growth (YOY)




Chinese imports growth (YOY)




Japan GDP growth (second estimate)




Chinese exports rose 7% year over year, beating analysts' 5.3% expectations, while imports dropped 1.6%, missing analysts' 4.9% growth expectations. With rising exports and falling imports, China's trade surplus widened from $18.4 billion in April to $35.9 billion in May. This is a positive sign for the Chinese economy as a whole, but the Chinese are trying to transition their economy from being so dependent on exports and infrastructure. They have lots of work to do on that front. Still, the rebound in growth from April's moribund 0.9% suggests China is on track to hit its 7.5% economic growth target for the year, which is positive for economies around the world.

The second economic report pushing up the markets today was in Japan, where the government upped its estimate of GDP growth in the first quarter from 5.9% to 6.7%. The revision was the result of an increase in private investment, which rose 7.6% versus an earlier estimate of 4.9%. Japan's first quarter was artificially high, given a steep rise in the sales tax at the end of the quarter. While initial retail reports in Japan have been positive so far this quarter, it remains to be seen how much of the growth can be sustained in the second quarter.

With positive economic numbers out of China and Japan, industrials are leading the stock markets higher today.



Industrials' results fluctuate with the state of the economy, so when there is positive data on economic growth the stocks tend to do well. As such, General Electric, United Technologies, and Caterpillar are all among today's biggest Dow movers.

Also of note today is that Apple split its stock 7-to-1 and now trades for $93.63 per share. This sets up Apple for possible inclusion in the Dow Jones Industrial Average: The stock would no longer dominate the index due to a high price. There are no guarantees, however: Dow Jones components are not chosen based on hard-and-fast rules, but are hand-picked by a committee.

One intriguing possibility, given the criticisms of the Dow, is to expand the index from 30 stocks to 50. This would mark the first time the historically stodgy Dow has been expanded in more than 80 years, but it could help the index fulfill its mission of providing "a clear, straightforward view of the stock market and, by extension, the U.S. economy."

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