The Dow Jones Industrials (DJINDICES:^DJI) started off the week with a gain of almost 89 points, continuing its strong run upward over the past week or so. But starting tonight, the average will start looking for the earnings growth it needs to sustain its rally. At a time of maximum anxiety among investors about earnings prospects, we'll see in the coming days and weeks how the latest quarterly releases match up with the long-term expectations that investors have for various stocks and industries. How those companies do could either continue the Dow's uptrend or lead to a market reversal.
Today, though, the biggest winners in the Dow were those with fairly solid earnings prospects. UnitedHealth Group (NYSE:UNH) climbed more than 2% after Barron's gave favorable comments about the health-insurance company's ability to profit from the implementation of Obamacare. Although most analysts have focused on the company's insurance business, UnitedHealth also includes its Optum health-services and management arm, which stands to get huge growth from efforts to attach rising health-care costs at the source by preventing and changing harmful behavior among patients. If those prospects work out, then UnitedHealth could benefit on both sides of its overall business.
Wal-Mart (NYSE:WMT) also jumped 2%, signaling a departure from its usual lower-volatility performance. The retailer is already so huge that substantial growth is difficult for Wal-Mart to muster, but analysts still see the company posting earnings growth of about 5% this year and 10% next year as it continues to make moves to capture new segments and strengthen its hold over existing ones. What many people don't realize about Wal-Mart is that like many retailers, it has a substantial presence overseas, and revenue in its international division has grown at a much faster rate of almost 40% over the past three years, compared to just 7% for its U.S. sales.
Finally, Bank of America (NYSE:BAC) rose 1.7% despite new regulations imposing a 5% leverage ratio on the largest banks in the country. That's even stricter than the Basel III international banking regulations called for, but the FDIC believes that requiring B of A and its other large-bank peers to set aside common equity capital of 5% of total assets will ensure greater stability in a financial crisis. Banks could see pressure on lending from the need to restrain leverage, but the big move is that off-balance-sheet accounting won't prevent banks from having to consider them as part of their own operations for calculating the ratio. With higher mortgage rates already eating into non-interest income, it's surprising to see B of A shares rise, although in the long run, a steeper yield curve might do more good for the bank's profits.
Fool contributor Dan Caplinger owns warrants on Bank of America. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Bank of America and UnitedHealth Group and owns shares of Bank of America. 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.