On Sept. 24, 2010, David Tepper, the No. 1 hedge fund earner in 2012, said that the economy is going to improve and stocks will go higher or the Federal Reserve will make sure the economy will improve and stocks will go higher. Today, even though the markets are at all-time highs, he said he still believes the markets will continue to rise. He feels that the evidence is overwhelming on why stocks will continue to climb higher. Foolish writer Morgan Housel quoted David's full comments earlier today, which you can read by clicking here.
Tepper's comments sent positive shock waves throughout the markets today, and all three of the major U.S. indexes rose higher. The Dow Jones Industrial Average (DJINDICES:^DJI) gained 123 points, or 82%, while the Nasdaq rose 0.69%, and the S&P 500 managed to become the best index performer of the day after increasing 1.01%.
Big Dow winners
Shares of Walt Disney (NYSE:DIS) rose by 0.22% after the stock received a positive rating. BMO Capital initiated coverage on the company today and gave shares an outperform rating right off the bat. Analyst Daniel Salmon stated that Disney has what he believes to be a powerful and the most sustainable advertising franchise in the U.S. with its ESPN brand. Additionally, the other units of the business, parks, movies, and unique set of characters, which can be monetized in a number of different ways, truly set Disney apart from the competition. BMO also gave shares a price target of $76.
Microsoft (NASDAQ:MSFT) was also a big winner, as shares rose 2.23%. The increase came after the company announced that it would be adding Google (NASDAQ:GOOGL) Chat to its Outlook.com service. Microsoft has been attempting to attract customers away from Google, and this move should help with those efforts. Shares of Google were also higher by more than 1% and today's announcement should truly be seen as a positive for both companies. Microsoft can now offer customers a service that was previously unavailable on such a platform, while Google can continue to gain users, even if it's through a competitor's service.
But the big winner on the Dow today was Bank of America (NYSE:BAC), whose shares popped 2.77%. My colleague John Maxfield, who diligently follows the banking industry, noted this morning that while the bank's stock may be moving higher on Tepper's comments, shares may have soared on something different altogether. Regardless of why shares moved today, John stresses that investors in the banking industry need to be sure they keep a close eye on valuation. He believes that Bank of America's stock price has finally caught up with the legal issues it had been facing, and he pointed out that for the first time in years, shares are trading above tangible book value.