For years, the stock market has gained on hopes that efforts from the Federal Reserve and other central banks around the world will help support the economy long enough for it to start growing on its own. More than four years after the market hit bottom, investors are finally starting to celebrate signs that the economy could be ready to stand on its own two feet again: Manufacturing activity just hit its best level in nearly two years, and first-time jobless claims fell to levels not seen since the beginning of 2008, and in response markets are soaring, with the Dow Jones Industrials (DJINDICES:^DJI) up 121 points as of 10:55 a.m. EDT and the S&P 500 climbing 1% to pass the 1,700 mark for the first time ever.
Two financial stocks are leading the Dow's charge higher: Bank of America (NYSE:BAC) and American Express (NYSE:AXP) have both posted gains of more than 2%. Both companies are clearly benefiting from the prospect that stronger economic activity will drive both credit card spending and loan demand higher. Yet investors appear to be brushing off a court decision yesterday that the Federal Reserve's implementation of transaction-charge limits on debit cards inappropriately left fees too high. B of A saw profits drop when the Fed's regulations took effect, and AmEx has recently entered the prepaid debit-card business with its Bluebird offering, so the results of the court case could have lasting effects on earnings in the future -- although the negative impact may pale in comparison to what overall economic improvements will bring in.
Still, gains are broad-based throughout most sectors. United Technologies (NYSE:UTX) has picked up 1.8% based largely on the good news on the manufacturing front. United Tech has dual exposure to the industrial sector through its extensive aerospace business and its Otis elevator unit, leaving it poised to benefit in multiple ways from economic strength. With prospects already looking bright on the commercial-aerospace side of the business, further economic improvement should bolster United Tech's other businesses and potentially give it a broader base on which to build future growth.
Finally, outside the Dow, Zillow (NASDAQ:ZG) has spiked 12.3%. The company doesn't announce earnings until next week, but a soaring housing market has focused attention on real-estate-oriented plays. The company is expanding its real-estate information offerings to take advantage of all aspects of the business, including rental, mortgage, and renovation-based information, which positions Zillow well to keep reaping the benefits of a booming U.S. housing market.
Fool contributor Dan Caplinger owns warrants on Bank of America. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express, Bank of America, and Zillow. The Motley Fool owns shares of Bank of America and Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.