At the half-way point of the trading day the Dow Jones Industrial Average (DJINDICES:^DJI) was up 19 points (0.14%) to 13,342. The S&P 500 (INDEX: ^GSPC) is up 3 points (0.21%) to 1,436.
The market is up as investors react to Germany’s Federal Constitutional Court ruling that the European Stability Mechanism is legal. The ESM is a 500 billion euro fund to bail out EU states in trouble. The ESM was supposed to go into effect in July but can’t start until Germany ratifies it. The German court ruling clears the way for that to happen.
The markets would likely be even higher if not for tomorrow’s Federal Open Market Committee meeting. Investors expect the Federal Reserve will announce a third round of quantitative easing tomorrow. There is always a risk that the Fed will do nothing, which would likely hit stocks hard.
The markets as a whole are up, and a few stocks are leading the way.
Today's Dow Leaders
- Today's Dow leader is JPMorgan Chase (NYSE:JPM), up 1.09% to $40.03. Banks have been hit by fears of a European financial crisis, and JPMorgan has been hurt by the "London Whale" fiasco. The German court's decision should hopefully quell those fears for the time being. In July, JPMorgan crushed earnings expectations. Hopefully the company can do it again when it reports Q3 earnings on Oct. 12.
- Second behind JPMorgan Chase is Travelers (NYSE:TRV), up 0.9% to $67.55. Yesterday, Travelers announced it has increased its business insurance rates roughly 8% this quarter, versus 7% last quarter. The company began increasing rates earlier this year after increased catastrophe losses last year, combined with record-low interest rates, combined to squeeze the insurance company's profits. The company was the first Dow company to miss on earnings expectations this quarter. It may improve this upcoming quarter, but with interest rates still low, the company is fighting a large headwind.
- General Electric (NYSE:GE) is third, up 0.91% to $21.79. Earlier today, GE hit a 52-week high of $21.93. Yesterday, the FDIC’s board met and did not take action on the proposed deal for GE to buy MetLife's banking business. The deal was announced in December, and a mid-2012 closing was expected, but that now looks unlikely. In other GE news, Bloomberg reported this morning that GE was considering selling its $2.2 billion stake in Bank of Ayudhya, Thailand's fifth-largest lender. GE has been shrinking its GE Capital business ever since the financial crisis devastated the otherwise diversified GE. Fool analyst Sean Williams recently took a look at GE and laid out three key things to watch at the company. Click here for his take.
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