Opening higher Thursday, the Dow Jones Industrial Average continued its upward movement in the morning session, gaining more than 200 points to over 10,924, about a 1.9% jump. Good news on the employment front in the U.S. was all the encouragement investors needed. Bargain hunters were leading the market, as only one Dow stock was down in early trading.
The Federal Reserve announced that a third round of quantitative easing might not be needed as the economy is expected to regain its footing later this year. For the year, the Dow is down more than 6.3%. Over 4.65% has been trimmed from the Dow in the past five days of trading.
Bank of America (NYSE:BAC) was up about 4%, over 25 cents, to more than $7 a share. Capital One was upgraded this morning, which is lifting the financial sector. While Bank of America is down about 30% for the week, the Fed commitment to low interest rates is more than just that: It is a statement that the financial sector will continue to be recapitalized by the central authorities. At $10 a share, there was much written about how Bank of America was worth more than that in intrinsic value alone. Now at $7 per share, traders are finding it more attractive this morning. Bank of America now has a beta of 2.18, meaning it is twice as volatile as the entire market as a whole.
Back too was the Big Cat, as Caterpillar (NYSE:CAT) picked up more than $1, about a 1.3% gain, to over $86 in early action. Concerns have global economic growth have plowed the share prices of Caterpillar more than 21% lower for the month. Caterpillar is now trading double digits below its 20-, 50- and 200-day moving averages. A very volatile stock, Caterpillar has a beta of 1.72.
Three upgrades and good news on earnings had Cisco (NASDAQ:CSCO) rising more than $2 per share, over 15%, to almost $15.90. Cisco is down more than 11% for the week. But favorable earnings news coupled with a recent announcement of cutbacks to make the company more efficient has Cisco more than 2% above both its 20- and 50-day moving averages.
Johnson & Johnson (NYSE:JNJ) was up about $1.50, around a 2.4% spike, to over $61.70 on positive analyst reports and the settling of a lawsuit. Johnson & Johnson is down about 10% for the month. With a relative strength index rating of 35.76, Johnson & Johnson is close to the 30 mark for when a stock is viewed as being oversold.
Traders obviously felt there was a big sale on Wal-Mart (NYSE:WMT), as the world’s largest retailer was up more than 2.33% to over $49.60, picking up over $1.10 a share. The “sneak peek” of second-quarter earnings was greeted by Wall Street with enthusiasm this morning. Down more than 10% for the month, Wal-Mart has an RSI rating of 35.28.
Boeing (NYSE:BA) was the only Dow stock headed lower in early buying and selling, down about $1, more than a 1.7% descent to under $56.20. Concerns about cutbacks in Pentagon spending has hit the defense sector hard since the debt ceiling agreement was reached. Down about 15% for the week, Boeing has an RSI rating of 23 and a beta of 1.29.
Jonathan Yates does not own any of the stocks mentioned in this article.
