Why These 3 Dow Stocks Surged Today

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It was a strong day for stocks, with the Dow Jones Industrial Average (INDEX: ^DJI) gaining 0.56%. Some names surged more than others. These were the three biggest gainers:

Company

Today's Price Change

Bank of America (NYS: BAC) 5.7%
Caterpillar (NYS: CAT) 2.9%
United Technologies (NYS: UTX) 2.6%

Why, you ask, did shares of these three companies surge?

Where credit is due
Investors are buying stocks following a string of positive economic news. On Friday, we learned that the U.S. added 200,000 jobs in December. Yesterday, Alcoa announced that it expects strong aluminum demand for 2012. Ford's (NYS: F) chief financial officer said today he expects a "strong" fourth quarter, despite supply-chain troubles because of flooding in Southeast Asia.

Perhaps most importantly, yields are down in Europe, and the sense of outright panic has subsided considerably.

Given all this, it's no surprise that Bank of America and Caterpillar are surging. Banks and construction-equipment manufacturers are especially sensitive to economic conditions. Not only is demand for both credit and cranes volatile, but BofA and Caterpillar also carry considerable leverage on their balance sheets that amplifies both the good and the bad.

In addition to today's general euphoria, a fresh deal for United Technologies pushed up its shares. The Defense Department awarded it a $194 million contract for F-35 Lightning II fighter engines. The win helped to reassure investors concerned about potential defense cuts hitting its top line.

The latest economic news is certainly important news and a sign that the economy may finally be starting to turn the corner and whetting investors' appetites for buying stocks. Bank of America, Caterpillar, and United Technologies all beat the market today. But if you're interested in one stock that our chief investment officer picked to crush the market in 2012, check out our brand new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. For a limited time, you can get instant access to the name of this company by for free

At the time this article was published Ilan Moscovitzdoesn't own shares of any company mentioned. The Motley Fool owns shares of Bank of America and Ford.Motley Fool newsletter serviceshave recommended buying shares of and creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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