The Dow's Drop Didn't Stop These Stocks

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Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The losing streak for the Dow Jones Industrials reached five days today, as investors continued to focus on the potential for catastrophe among the various obstacles facing the economy. Until the government resolves its budgetary impasse, investors won't feel comfortable about a possible debt-limit crisis or government shutdown. Combined with other ongoing issues about the economy, market participants sent the Dow down another 61 points today, with broader market measures posting similar percentage declines.

Yet there was optimism to be found among some stocks even on an ugly day for the markets. JPMorgan Chase proved to be the most resilient stock in the Dow, rising 2.7% as a series of reports has elaborated on a massive potential settlement between the bank and regulators to settle a number of legal and regulatory disputes. The deal could cost JPMorgan $11 billion, including as much as $4 billion in direct relief for customers affected by the company's mortgage-backed securities practices. But if it gets certainty on a major source of potential liability for the bank, investors appear to be willing and eager for JPMorgan to pay it.

Cisco Systems also performed well, climbing 1.2%. Traders might well have hinged the advance on positive comments from Jim Cramer last night, but a potentially longer-term rise could result if comments from CEO John Chambers earlier this evening prove true. Chambers believes that strength in Europe might come sooner than expected. Given the downward pressure that the European recession has had not just on Cisco but many of its peers, any recovery there could be instrumental in further gains for stocks generally.

Finally, M&A activity and strategic partnerships produced the biggest gains of the day. MAKO Surgical soared more than 80% as medical-device peer Stryker agreed to buy the robotic-surgery specialist for $1.65 billion. Stryker paid a huge premium for MAKO, saying that the deal will boost earnings per share by the third year after the acquisition. Stryker investors seemed to disagree, as its stock sank 3%. At the same time, Pacific Biosciences of California posted gains of more than 70% after it agreed to a deal with Roche that will pay it as much as $75 million in upfront cash and potential milestone payments for the right to use Pacific Biosciences' proprietary genetic-analysis technology. If the deal ends up bearing fruit, some believe that Roche might simply go ahead and buy out the company -- but it could take years before the full importance of the deal is recognized.

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Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Cisco Systems, MAKO Surgical, and Pacific Biosciences of California and owns shares of 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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