The Memorial Day weekend didn't halt the positive momentum of the Dow Jones Industrials (DJINDICES:^DJI), which were up 75 points as of 11 a.m. EDT, about 35 points shy of joining the S&P 500 in setting a record high. Unexpectedly strong economic data showed better gains in home prices than expected in March, along with positive readings on durable-goods orders and consumer confidence. The resulting favorable sentiment among investors was enough to offset disappointing news from Pfizer (NYSE:PFE), Goldman Sachs (NYSE:GS), and JPMorgan Chase (NYSE:JPM), whose shares nevertheless rose Tuesday morning.
The end of Pfizer's bid for British drugmaker AstraZeneca was bittersweet, as the stock rose nearly 0.5% despite the company choosing not to pursue a merger. With U.K. securities rules now requiring that Pfizer not make another bid for at least six months, the big question facing investors in both companies is whether the deal is truly off or whether Pfizer will work with its target candidate to come up with an acceptable offer. For Pfizer, the stakes are huge, as current U.S. tax laws mean it would get a major boost by moving its tax home to Great Britain, along with the other advantages that Pfizer identified from economies of scale and cost-saving synergies. Nevertheless, Pfizer shareholders recognize that paying too much for the deal could be worse than not getting a deal done at all.
Meanwhile, JPMorgan Chase and Goldman Sachs both rose between 1% and 2% as the two companies were named in a lawsuit alleging price manipulation in the zinc market. The claims look eerily similar to what players in the metal-warehousing industry have had to address in the aluminum market, including rules that create backlogs of requests for physical metal delivery and unnecessary movements of metal between warehouse facilities. The news offers a possible justification for Goldman Sachs choosing to sell its Metro International Trade Services unit, which was also included in the lawsuit. Given the turmoil in the commodities markets over the past several years, metal buyers are putting as much pressure as they can on market participants like JPMorgan Chase and Goldman Sachs to make sure they're not doing anything to keep prices higher than absolutely necessary.
Whether or not the Dow Jones Industrials set a new record today, there's no doubt that the positive attitude among investors is encouraging for stock market bulls. Even as the market ascends, fundamental business strength could carry stocks further still in the months to come.
Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of JPMorgan Chase. 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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