Stocks Make Big Gains for All the Wrong Reasons

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U.S. stock markets are up again today thanks to the promise of stability in China. Monday's fears of skyrocketing interest rates have been eased by four straight days of falling rates in China and promises from government officials that there won't be a liquidity crisis. Investors are looking past bad news in the U.S., where the Department of Commerce said first-quarter GDP growth was only 1.8% -- significantly lower than the previous estimate of 2.4%. As of 3:20 p.m. EDT, the Dow Jones Industrial Average has gained 1.15%, while the S&P 500 is up 1.14%.

Boeing is among the companies leading the charge, rising 2.3% today. Competitor Bombardier delayed a flight of its CSeries jet for the second time, this time pushing the test back until July. Bombardier is targeting the market dominated by Boeing's 737, so the delays, along with Bombardier's failure to notch any orders at the Paris Air Show, are good for Boeing. Boeing will report earnings on July 24, and investors will likely get more information about the impact of delayed orders for the 787 Dreamliner.  

Alcoa is the lone big loser on the Dow today, falling 2.3%. Slower-than-expected GDP growth has had many effects on trading today, and they all seem to be bad for Alcoa. If the economy doesn't grow quickly enough, the Fed may keep its easy-money policies in place, which may have investors excited today but is not necessarily good for Alcoa: The company benefits more from a growing economy than from easy money.

The stock market has become something of a logic vacuum lately, cheering stimulus and booing the Fed's bullish predictions last week. Long-term investors should be hoping for stronger growth and fewer stimuli. It's a good thing earnings season is around the corner: Perhaps stocks will begin to trade based on fundamentals, rather than macroeconomic speculation.

The article Stocks Make Big Gains for All the Wrong Reasons originally appeared on

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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