The stock market has seen a lot of volatility recently, and part of its choppiness stems from the fact that various sectors of the market are behaving quite differently than each other. That was never more evident than it was on Monday morning, as major market benchmarks moved nearly in opposite directions. As of 10:30 a.m. EDT, the Dow Jones Industrial Average (^DJI -0.16%) was up 241 points, pushing through the 35,000 mark for the first time ever. However, the S&P 500 (^GSPC -0.38%) was up just a single point to 4,234, and the Nasdaq Composite (^IXIC -0.13%) had fallen 156 points to 13,597.
A couple of stocks stood out in the Dow's surge past 35,000. Both Caterpillar (CAT 0.46%) and Boeing (BA -0.14%) have been through tough times over the past year, but hopes for an economic rebound have investors more optimistic than ever about their prospects to bounce back and be strong performers not just in the near term, but well into the future. Below, we'll look more closely at how they contributed to the Dow's impressive gains on Monday morning.
This Caterpillar is hungry for growth
Shares of Caterpillar climbed almost 2% on Monday morning. That sent the stock to its best levels in history, extending an amazing performance that boosted its total return over the past year to more than 125%.
For several years, Caterpillar has taken hits from a host of adverse factors. The energy industry has been in the doldrums for a long time, and the COVID-19 pandemic only exacerbated the trends that had sent crude oil prices lower. That made it even more difficult for exploration and production companies to buy the equipment and supplies that Caterpillar offers. Similarly, commodities prices fell through the floor amid oversupply conditions and plunging demand during the pandemic.
Now, though, those trends are reversing themselves. Oil prices are back in the $60s and show signs of climbing further. The mining industry is recovering nicely, with prices of both precious and industrial metals moving sharply higher amid expectations of dramatic growth in economic activity. Add to that a booming construction industry and plans for big boosts in U.S. infrastructure spending, and it's easy to see why Caterpillar is firing on all cylinders.
Investors need to remember that Caterpillar is a very cyclical stock that tends to perform best when the economy appears to be expanding. The first sign of a slowdown could bring the stock's short-term boom to an end. Nevertheless, for long-term investors, Caterpillar has an impressive track record that has made it a reliable winner for decades.
Boeing looks to fly higher
Boeing had an even bigger positive impact on the Dow, as its stock price rose by more than 2%. Even though the aerospace industry faces a longer uphill climb than most other sectors, investors are increasingly comfortable about Boeing's status as one of the two major commercial aircraft manufacturers in the world.
Even before the pandemic, Boeing faced the massive challenge of having its key 737 MAX aircraft grounded for more than a year. The 737 MAX is flying once again, and airlines are starting to see their passenger counts rise. Yet even though aircraft deliveries are starting to move higher, they're still at much lower levels than they were in the past. Boeing is therefore still eating through its cash reserves as it waits for more passengers to return to the skies, and for airlines to feel more comfortable about adding new planes to their fleets.
The stock's recent gains indicate rising investor confidence that Boeing can adapt to the changing trends in aerospace. It's possible that airline operations will remain scaled back for years to come, which would drive greater demand for smaller aircraft and a reduced appetite for wide-body jets that have been Boeing's bread and butter. That could force a longer-term consolidation for the aerospace giant, and if it's unsuccessful, then Boeing's recent gains could prove short-lived.