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Dow Ends 6-Week Winning Streak

John Divine
August 9, 2013

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.

Losing ground for the fourth time in five days after reaching record highs last week, the Dow Jones Industrial Average (INDEX: ^DJI) headed into the weekend on a sour note. Friday's 72-point decline steepened the index's weekly losses, with the Dow off more than 230 points in five days. Although 230 points sounds like a heavy sell-off, it's only a 1.5% haircut, and the reason behind the move was almost entirely speculative. Wall Street is spooked by the U.S. economy's slow, but steady, progress, fearing the Fed will wind down easy-money policies soon. Despite a dearth of bad news, the Dow dropped 0.5%, ending at 15,425 Friday. 

Alcoa (NYSE: AA) was far and away the best performer today, surging 3.9%. Though earlier this week the U.S. reported a narrower trade deficit, Alcoa's two-day surge has more to do with China's economy. Yesterday, China reported higher-than-expected imports and exports, suggesting more prosperous times in the world's second-biggest economy. Friday brought more good news from the East for the aluminum giant: Chinese industrial production climbed nearly 10% in July from last year, kick-starting the basic materials sector, which was the only sector ending in the green today. 

Caterpillar (NYSE: CAT), also riding the coattails of China's factory data, tacked on 0.7%. The industrial machinery behemoth has severely lagged the Dow this year, as a decelerating Chinese economy, and wavering commodities prices, combined to send shares more than 5% lower. The numbers from China in the last two days are encouraging, but it's a little early to call the numbers indicative of a "trend." A few more months of sustaine