3 Stocks Delivering Market-Beating Returns

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The last full week of trading of the year got off to a great start today, with the Dow Jones Industrial Average and the broader S&P 500 up 0.8% and 1.2%, respectively. The ostensible explanation for the optimism that carried stocks higher lies with positive developments in the fiscal cliff jamboree. Financials, which are a bellwether for policy uncertainty and the risk on/ risk off trade, were the best-performing sector, with the S&P 500 Financials index gaining 2.1%.

Fiscal cliff watch: It appears that negotiations to avert the "fiscal cliff" may finally gaining some momentum. Following reports that John Boehner blinked over the weekend, offering to allow tax rates to increase for those earning over $1 million annually, the House speaker met with President Obama today.

With two weeks until the putative Dec. 31 deadline, it's none too soon for lawmakers to be gearing up their efforts. While this bodes well for the odds of an agreement in the just before -- or a little bit after -- the new year rolls around (I think the latter is more likely), it's worth remaining grounded. As PIMCO CIO told CNBC today: "If we avoid the fiscal cliff ... then we [are] still looking at still sluggish growth of 1.5 to 2 percent next year." I'll paraphrase and add that even if we avoid the fiscal cliff, stocks could face an earnings cliff next year.


Click here for our latest fiscal cliff coverage.

The micro view: Bank of America was the best-performing Dow component today, up 4%. In fact, B of A has led its universal bank peers Citibank and JPMorgan Chase in smashing the broad market this quarter:

BAC Chart

BAC data by YCharts.

In fact, despite some nerve-jangling declines during the second quarter, 2012 has produced a remarkable turnaround in fortunes for this group, particularly B of A:

BAC Chart

BAC data by YCharts.

Despite this remarkable performance, there is reason to believe that BofA could continue to produce market-beating gains over the next several years. To find out why, click here to request The Motley Fool's premium report, which includes twelve months of ongoing coverage.

The article 3 Stocks Delivering Market-Beating Returns originally appeared on Fool.com.

Alex Dumortier, CFA, has no positions in the stocks mentioned above; you can follow him on Twitter, @longrunreturns. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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