The bull market for stocks continued, as the S&P 500
Some of the Dow's components did even better than the overall average. Let's turn to three of them.
Bank of America
Financial stocks continued their advance today, and B of A is consistently the best performer among the Dow's financials. In the short run, the bank's passing the Fed's latest round of stress tests was a vote of confidence that its capital-raising efforts have achieved their goal.
Longer-term, many expect foreclosure activity to increase as the settlement between big mortgage banks and federal and state governments clears up concerns about the so-called robosigning scandal. Getting foreclosures through the system would help B of A put its toxic-asset troubles behind it, clearing the way to a true recovery for the stock.
Chemical-maker DuPont posted a nice jump today, adding to substantial gains from last October's lows. Part of the reason for that is the low price of natural gas, which is pushing its way down toward another low for the decade.
Chemical processes need feedstock, and natural gas in particular provides essential ingredients for many important products that DuPont makes. If DuPont can lock in low natural gas prices through derivatives and other means, then it could assure itself of relatively high margins for the foreseeable future.
GE may almost have collapsed due to its finance unit three years ago, but now it's riding high. A Bloomberg report noted that credit-default swaps on GE Capital have narrowed further than those of big banks as CEO Jeff Immelt has shrunk GE Capital's balance sheet in favor of the industrial side of GE's business.
The decline in swap costs should translate to lower interest rates on GE's debt. As its debt matures, new financing should cut GE's interest costs, adding to its bottom line. That's good news for both GE and its shareholders.
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