We started the week of trading in 2012 with an eye on the fiscal cliff, and by the end of the week our focus had shifted to more important things like economic news and the upcoming earnings season. But the resolution, however small it was, of the fiscal cliff gave investors enough reason to buy stocks this week, and the Dow Jones Industrial Average (DJINDICES:^DJI) rose 3.8% on the week while the S&P 500 (SNPINDEX:^GSPC) gained 4.6%.
Caterpillar (NYSE:CAT) was one of the stocks that soared like a rocket on Wednesday on the fiscal cliff news. The stock was up an incredible 9.3% this week, most of that after the fiscal cliff deal. Caterpillar has been one of the most volatile stocks over the past month on fear that Congress would send us into a recession and damage a fragile construction market. That fear took the week off, but don't think the same concern won't enter the picture in two months, when the debt-ceiling debate hits Washington.
Hewlett-Packard (NYSE:HPQ) was another big winner this week, rising 10.7%. The stock jumped on Monday before the fiscal cliff on news that the company would keep a government contract that was being looked at. IBM (NYSE:IBM) had challenged a federal contract to provide wireless tracking of medical devices that was worth $543 million, but the U.S. Government Accountability Office decided that the contract would stand up.
Alcoa (NYSE:AA) was the third biggest winner on the week, gaining 8.9%. Like Caterpillar, the stock has been extremely volatile in recent weeks because investors see the stock as a way to play economic growth or potential recession. The resolution of the fiscal cliff and relatively strong employment and economic data throughout the week sent the stock soaring this week.
Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.