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Japan's Bold Stimulus Pushes the Dow Higher

By Dan Carroll - Apr 4, 2013 at 2:33PM

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Financials rise on major monetary easing across the Pacific.

It's another upbeat day in the markets, and the Dow Jones Industrial Average (^DJI 0.60%) is humming along. As of 2:20 p.m. EDT the Dow has picked up 43 points, or 0.29%, after hitting yet another intraday high earlier in today's session. Most stocks on the blue-chip index are in the green after big news out of Japan fueled a market jump this morning. Let's catch up on the latest.

Eyes on Japan
Japan pulled the trigger on a massive stimulus plan, unleashing $1.4 trillion worth of quantitative easing as the country looks to push back against the deflation that has plagued its economy for years. Prime minister Shinzo Abe's goal of 2% inflation still looks distant, but the yen plunged after the stimulus was announced -- a good thing for major Japanese multinational corporations looking to get a leg up on international competitors.

The move has certainly helped financial stocks rake in gains today. Bank of America (BAC 0.53%) and JPMorgan (JPM 0.70%) have pulled in 0.9% and 1.4%, respectively, to rank among today's top Dow stocks. These companies, and the financial sector at large, have done wonderfully in the easy-money climate of the United States since the recession, and Japan's new stimulus vigor should help banking operations in the world's third-largest economy. If the easing works and Japan's economy rights itself after two decades of stagnation, the biggest banks will be poised to profit.

Outside of finance, McDonald's (MCD -0.21%) has seen shares rise 1.5% despite reports of trouble in New York City. Several hundred employees of McDonald's and other fast-food restaurants in NYC have gone on strike, demanding better pay and the right to unionize. It's not a move that will shake McDonald's dramatically, but the company doesn't need the headache at this time. Regardless of the stock's surge in 2013, same-store sales fell slightly in February. McDonald's needs its resources focused on improving margins and bringing sales back up to speed, not dealing with striking workers.

Finally, Verizon's (VZ 1.10%) shares are up about 0.6% after CEO Lowell McAdam said he would be receptive to a no-contract wireless policy similar to the one T-Mobile introduced last week. T-Mobile's no-contract policy will drop its standard two-year contracts, instead having buyers pay for the entire cost of their phones over monthly installments. While T-Mobile claimed that such a plan would lower the cost for consumers, it's not as big a shake-up as it seems: By paying for the phone over time, buyers are still locked into a form of long-term plan. Still, if this new model can boost profitability, it's worth a shot for Verizon and its rivals.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,120.28 (0.60%) $191.66
McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$244.01 (-0.21%) $0.51
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$51.24 (1.10%) $0.56
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$35.84 (0.53%) $0.19
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$127.24 (0.70%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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