The Dow Jones Industrials (^DJI 0.69%) got off to a strong start this morning, posting a 106-point gain by 10:55 a.m. EDT based largely on continuing optimism about the pace of the U.S. economic recovery. With Friday's jobs report sending bond yields soaring and bond prices crashing late last week, investors using asset-allocation strategies likely saw the news as mixed for their overall portfolios. Still, the stock market has held up quite well in July, as the Federal Reserve isn't spooking markets about the potential end of its quantitative-easing program nearly as much as it did last month.
Still, investors should take today's gains with a grain of salt, because two major events will soon take the focus off economic data. After the closing bell today, Alcoa will kick off earnings season, and the market has a lot riding on the results it will see in the coming weeks. Secondly, on Wednesday the Fed will release its latest Federal Open Market Committee minutes, which will provide some more context for the June decision that sparked such strong reactions from investors when it was first released.
So while you're waiting to get more big-picture information, focus on company-specific news that can move the stocks in your portfolio. For instance, in the tech sector, Intel (INTC -0.38%) is the big loser in the Dow today, falling 3.4% after a Wall Street analyst again cited the weak PC sector as hurting Intel's long-term prospects. Even a single-penny reduction in Citi's earnings outlook was enough to prompt the decline, showing how sensitive stocks are to adverse news right now.
Corporate actions will also remain important. Dell (DELL.DL) shares have climbed 2.6% after proxy advisory company Institutional Shareholder Services recommended that the company's shareholders vote to approve the proposed deal from Silver Lake and Michael Dell to take the company private. The buyout certainly offers more certainty for investors than a rival tender-offer proposal from Carl Icahn and Southeastern Asset Management, which could leave shareholders with ongoing stock positions if the tender offer is oversubscribed.
Finally, look to other markets for guidance. For instance, precious metals bounced off their recent lows, with gold prices climbing $23 per ounce. Key gold-miners are also up sharply, with Barrick Gold (GOLD 1.64%) rising about 3% and Goldcorp (GG) up 1.4%. As two of the largest companies in the industry, both Barrick and Goldcorp have the ability to make strategic moves designed to pick up lucrative assets at bargain-basement prices. As weaker junior miners have to consider extraordinary measures to stay afloat, look for Goldcorp and Barrick to take advantage of fire-sale conditions to take their pick of the litter.
