What's Behind the Dow's Rally

The Dow Jones Industrial Average (INDEX: ^DJI) emerged shaky from last week's horrific showing, but the index has picked up much-needed steam as the day has progressed. As of 2:15 p.m. EDT, the index is up 93 points, or 0.7%, and only six components are in the red. With this week presenting a major test for Dow stocks -- several staples of the index are reporting earnings throughout the week -- let's get caught up on today's bullish run.

Green lights on Wall Street
The Department of Commerce's report that retail sales beat estimates, jumping 1.1% in September, delivered some great news for investors. With the typical holiday rush right around the corner, this data comes right on the heels of last week's report that consumer sentiment is on the rise. The markets certainly took note, as retail titan Wal-Mart (NYS: WMT) has jumped more than 1.9% so far. The news also pushed the Dow's two banks, JPMorgan Chase and Bank of America (NYS: BAC) , higher by more than 1% each. B of A is leading all stocks with gains of 2.4%

Telecoms missed out on the party, however. With SoftBank's purchase of maligned Sprint (NYS: S) now official, AT&T (NYS: T) and Verizon have declined 1.4% and 0.1%, respectively. AT&T led all Dow stocks downward. While it's still doubtful that Sprint can rise up to compete with the two telecom giants on anything near equal footing, Softbank's bulwark of cash should at least shake AT&T and Verizon's confidence.

Pharmaceuticals have also had a great day so far. Merck's (NYS: MRK) osteoporosis drug ondanacatib succeeded brilliantly in Phase 2 trials, lifting the stock 2% to a 52-week high. Considering the patent cliff looming for many of Big Pharma's superstar drugs, the green light for one of Merck's pipeline stars should restore some confidence to shareholders. Johnson & Johnson (NYS: JNJ) also rose ahead of its earnings release as the entire health care sector has pushed the Dow higher.

Judgment week
Bank of America has had a nice run-up recently and could be approaching 52-week highs with a good earnings report this week. But with a P/E of just more than 10, is this stock still worth your money? To find out whether this big bank's a buy, get all the details you need to know in the Fool's premium guide to Bank of America. You'll find out in the report whether or not this stock's a good investment, given all of the threats and opportunities facing B of A. To read on, all you have to do is click here.

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Fool contributor Dan Carrollholds no positions in the stocks mentioned in this article. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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