Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Since first hitting 15,000 back in May, the Dow Jones Industrials (^DJI 0.96%) have traded on either side of the milestone level, as optimism over the economic recovery has been tempered by concern over interest rates and heightened geopolitical tensions in the Middle East. This morning, though, investors appear to be focusing more on the positives of the global economy, with many commentators citing more optimistic assessments of economic conditions in China and Europe as reasons to be bullish. By 10:45 a.m. EDT, the Dow was up 80 points, climbing back above the 15,000 level.
Among Dow components, the biggest gainer is Caterpillar (CAT 1.13%), up 2.4%. China reported that exports grew 7.2% in August, which was more than economists had expected. Caterpillar in particular has had its future prospects hurt by the slowdown in China, having marked down its long-range earnings estimates in future years as a result of the sluggishness of the Chinese economy. More favorable news from China, however, raises hopes that the slowdown in growth there could reverse itself and help bolster sales of construction and mining equipment, helping Caterpillar's prospects.
Alcoa (AA +0.00%) has risen 1.5%, likely for much the same reason, as the aluminum market has been sensitive to Chinese demand in the past. One interesting initiative that the company started last week that didn't get much attention, however, was its decision to combine its aluminum-scrap recycling unit with its packaging-market aluminum-recycling business to create a single Alcoa Recycling division. Given the oversupply in the aluminum market, it might seem counterintuitive to encourage recycling initiatives that by their nature reduce the need for new aluminum production. But if Alcoa can capture more of the recycling market, it can potentially provide more value to its customers. Already the company has worked with Boeing (BA 3.01%) to boost reuse of custom aerospace aluminum alloys in aircraft manufacturing; it is expected that 8 million pounds of reusable aluminum will be recycled. That will save Boeing costs and help improve Alcoa's standing as the aircraft maker's go-to supplier for aluminum in the future.
Finally, Johnson & Johnson (JNJ 0.94%) has gained about 0.1% as investors continue to assess the ramifications of reports that it's planning to sell off its clinical-diagnostics division. Until now, J&J has resisted the trend toward breaking off pieces of its health care conglomerate business, choosing instead to try to be a one-stop shop for all things related to health care. But with a sale potentially raising $5 billion, investors may end up looking at the potential move as helping J&J refocus on its core businesses and address some of the quality-control issues and other problems that have plagued the company in recent years.
