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Today's Dow Winners Are Winning the Economic Battle

By Dan Caplinger - Sep 24, 2013 at 8:00PM

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Boeing and United Tech are profiting from strong aerospace demand, while McDonald's and Nike maintain their consumer strength.

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.

Looking at the performance of the Dow Jones Industrials (^DJI 0.09%) today, it'd be logical to assume that investors were downbeat about the prospects for the overall economy. With concerns ranging from political disagreements concerning the debt ceiling, federal budget, and economic stimulus to fears that a 54-month bull market will eventually have to give way to a large correction, pessimism seemed to be the order of the day.

But focusing on the best performers in the downward-moving Dow today gives you a better handle on exactly which parts of the economy are firing on all cylinders. One area of definite strength is the aerospace industry, where Boeing (BA 0.52%) climbed 1.3% and United Technologies (RTX -1.97%) advanced half a percent. For Boeing, even bad news from the loss of a military contract wasn't enough to dissuade investors from the plane manufacturer's long-term prospects. Boeing has predicted $4.8 trillion in aircraft sales over the next two decades, and rival Airbus has weighed in with its own assessment that aircraft buyers will double the size of their fleets over the same time frame. That has positive ramifications for Boeing and for United Technologies, which gets a substantial portion of its revenue from providing aircraft components, parts, and systems and counts Boeing as a major customer. United Tech also won a lucrative Defense Department contract to produce jet engines for the F-35 fighter, bolstering its long-term prospects as well.

You can also find strength in the economy in high-profile companies with a consumer orientation and well-known name brands. McDonald's (MCD -0.94%) picked up 0.5% today even as the company is having to deal with lower-fat French fries from rival Burger King and continuing competition from elsewhere in the restaurant space. Even with its growth struggles, McDonald's has proven to be resilient even when the economy has been sluggish, and so investors often turn to it as a defensive play when market conditions start to look less certain. Similarly, new Dow component Nike (NKE 0.11%) got recognized for its brand strength by Wall Street analysts today, sending shares up two-thirds of a percent. Having spent massive amounts of money on marketing, Nike and McDonald's are both reaping the benefits with consumer loyalty.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends and owns shares of McDonald's and Nike. 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$32,832.54 (0.09%) $29.07
McDonald's Corporation Stock Quote
McDonald's Corporation
$256.80 (-0.94%) $-2.43
The Boeing Company Stock Quote
The Boeing Company
$165.89 (0.52%) $0.85
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
$91.20 (-1.97%) $-1.83
NIKE, Inc. Stock Quote
NIKE, Inc.
$114.00 (0.11%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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