Despite a slow week for news and earnings, the Dow Jones Industrial Average (^DJI 0.95%) posted a solid 1.59% gain this holiday week. Traders and short sellers were taking vacation this week, which often gives stocks a lift over the holidays, known as the Santa Claus rally. Here are the stocks leading the Dow higher this week.
Cisco (CSCO 1.66%) was up 4.2% for the week as investors began to see the incredible value hiding in its shares. The company has a $118 billion market cap but has $48.2 billion in cash and short-term investments to go along with a 3.1% dividend yield. This is no longer a high-growth company, but heading into 2014 it trades at an incredible value, which is rare in a market that's been dominated by P/E expansions this year.
Caterpillar's (CAT 3.57%) shares rose 2.2% despite reporting a 12% decline in global retail sales last month. That's the second straight month of 12% declines in sales and points to more weakness in Caterpillar's end markets. I'm concerned that China's credit fueled building bubble will have sales trending lower again next year in the world's fastest growing market, and with growth tepid in the U.S. and Europe, I don't see much upside in developed countries, either. Caterpillar had a good week, but this is a stock I'd be cautious about next year, given revenue trends.
Finally, American Express (AXP 2.05%) rose 1.8% as pre-holiday shopping came to a close. It also reached a $76 million settlement with federal regulators over allegations it misled consumers about benefits received from extra services such as identity theft protection. Of the total settlement, $16.2 million is a fine from the FDIC and, $59.5 million will be returned to 335,000 consumers through refunds. This isn't a huge hit to American Express long-term, and often investors are happier with ending legal actions than with the cost of the settlement itself.
