Sometimes, it takes a while for investors to get warmed up. This morning, positive news from the monthly employment report pushed stocks to early gains, but then, glum figures on consumer confidence led the Dow Jones Industrial Average (^DJI 0.40%) to erase most of its advance. Yet, throughout the afternoon, the average churned slowly higher and, by the end of the day, the Dow finished at its best levels, rising more than 80 points.
The two top performers in the Dow were bank stocks JPMorgan Chase (JPM 0.06%) and Bank of America (BAC -0.21%), which rose 2.6% and 1.7%, respectively. Both stocks can point to signs of general economic strength as a potential driver of stock gains. But the news wasn't all good, as a federal judge found that B of A could face liability in its role as trustee for Washington Mutual's mortgage-backed securities. In an interesting twist, though, a Bloomberg report said that many of JPMorgan's rivals, including B of A, are now recommending the same sort of trading strategy that JPMorgan's infamous "London Whale" followed in bringing about huge losses over the summer.
Caterpillar (CAT 1.59%) also posted a nice gain of about 1.2%. Concerns about the lack of progress in resolving the fiscal cliff are especially relevant to Caterpillar, given its sensitivity to broad-based economic conditions. The stock has already fallen substantially, down more than 25% from its highs from earlier this year. Arguably, therefore, Caterpillar shares already reflect that uncertainty, and any resolution could push the stock higher.
Finally, IBM (IBM -1.05%) rose 1.2%. The company made a controversial announcement regarding its 401(k) plan, saying that it would change its benefit structure to make lump-sum matching contributions in single annual payments rather than doing them throughout the year as employees contribute. IBM argues that the move will cut costs, but many are upset because it will essentially move up to a year's worth of investment appreciation out of workers' pockets into IBM's.
