It was a strong week for stocks, with the Dow Jones Industrial Average (INDEX: ^DJI) gaining 3.6%. But some names surged more than others. These were the three of the biggest gainers:
This Week's Stock Price Change
Bank of America (NYS: BAC)
JPMorgan Chase (NYS: JPM)
General Electric (NYS: GE)
Why, you ask, did shares of these three companies explode?
Where credit is due
The economy may finally be seeing a bit of good news. The number of people claiming unemployment benefits fell by 4,000 to 364,000, the lowest figure in three and a half years. And consumer sentiment improved to its highest level in six months. In addition, Washington managed to extend stimulative payroll-tax cuts and unemployment benefits for another two months so that yearlong extensions can be negotiated.
It's no surprise that we saw so many bank stocks react so strongly to the news. Banks are especially sensitive to the economy, which affects not just their ability to turn a profit, but also the values of their assets. (At a conference about a year ago, Citigroup's (NYS: C) chairman flat-out told a group of us that he considered the economy to be the single most important risk facing his company. Citi, along with Wells Fargo (NYS: WFC) , joined the two Dow banks in posting 5%-plus gains this week.)
With investors so pessimistic about the economy and banking in particular, this all certainly comes as welcome news. Financials surged more than 2% over the past two days.
While not exactly a bank, conglomerate GE has an enormous finance division that alone would be the U.S.'s fifth-largest bank. The company is so massive and diversified across sectors that it often acts as a bellwether for the economy as a whole.
Big movers outside the Dow included Micron (NYS: MU) , which jumped 16% yesterday on optimism that prices for its chips may finally be bottoming.
The strong economic data is certainly important news and a sign that the economy may finally be starting to turn the corner, albeit slowly and precariously. Bank of America, JPMorgan Chase, and General Electric all beat the market this week. 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 -- it's free.
At the time thisarticle was published Ilan Moscovitzdoesn't own shares of any company mentioned. The Motley Fool owns shares of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup and has created a covered strangle position on Wells Fargo. 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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