The Dow Jones Industrial Average (INDEX: ^DJI) continued roaring this past week, tacking on 2.4% in gains to close at 13,262 on Friday. One simple fact shows just how broad -based the rally was this week: Every single Dow stock, all 30 of them, closed the week in positive territory. The worst-performing Dow stock, Procter & Gamble (NYS: PG) , posted a 0.5% gain!
Still, not all gains were created equal. Here's a list of the week's three best-performing Dow stocks.
Bank of America (NYS: BAC)
JPMorgan Chase (NYS: JPM)
Alcoa (NYS: AA)
Source: S&P Capital IQ.
Banking stocks led the rally this week. As fellow Fool Matt Koppenheffer noted, the financial sector as a whole posted a 5.1% gain on the week, making it the best-performing sector in the market. The reasoning for the sector's rally was simple: positive results out of recent banking stress tests.
Shares of Bank of America and most of its peers are well off their 52-week highs while the rest of the market takes off. That's because earnings continued to be mired at low levels, Bank of America still is earning less than a tenth of what it earned back in 2005, and concerns remain about whether banks are as sufficiently capitalized as they need to be.
With stress tests assuming a worst-case scenario of unemployment at 13%, housing down 21%, and the Dow at 6,000, every bank except Ally Financial exceed a minimum 5% Tier 1 common capital ratio. The results don't mean the financial industry is ironclad, but it does lessen investors' fears of a worst-case scenario. With banking stocks extremely depressed, that was enough to cause a buying spree across financials.
Similar to banking, Alcoa is well off its 52-week high and has been aggressively sold off by investors who fear that any macro hiccup could cause the company a healthy dose of damage as aluminum prices stayed depressed. So it's only natural that with hopes for the global economy rising in line with market gains, Alcoa would be among the leading gainers in any broad rally.
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At the time thisarticle was published Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of Bank of America and JPMorgan Chase.Motley Fool newsletter serviceshave recommended buying shares of Procter & Gamble. 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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