What's Fueling Today's Rally?
Stocks are up today following a report that the unemployment rate dropped last month to the lowest level in four years. As of 2:40 p.m. EST, the Dow Jones Industrial Average is up 63 points, or 0.48%.
Despite the good news, uncertainty surrounding the fiscal cliff continues to keep a lid on both the economy and the markets. It was reported earlier today that consumer confidence is at a four-month low in the midst of the critical holiday-shopping season. According to Richard Curtin, the director of the Thomson Reuters/University of Michigan index of consumer sentiment: "Confidence plunged in early December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff."
At the beginning of this week, congressional Republicans outlined an offer to avert the impending timeline. They are now calling on the president to respond. At issue is the question of tax rates. President Obama has made it clear that he won't agree to any plan that doesn't include a tax hike for the highest-income earners. The Republicans, meanwhile, are looking for revenue gains by closing loopholes and phasing out certain deductions.
With respect to individual stocks, financials are leading the Dow higher today, with JPMorgan Chase and Bank of America up by 2.6% and 1.7%, respectively. As my colleague Dan Dzombak pointed out, "The big banks' financial results are highly dependent on the health of the economy, so these stocks are up thanks to today's unexpectedly positive jobs numbers."
Alternatively, technology companies are among the day's biggest laggards, a marked change of pace from yesterday. Microsoft is down 1.2%, while Cisco Systems is down 0.36%. As Fool analyst Matt Thalman noted, Microsoft is struggling after a research analyst indicated that the company's new Surface tablet is performing poorly because of its price point, and Cisco is down despite issuing positive forward guidance this morning.
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The article What's Fueling Today's Rally? originally appeared on Fool.com.John Maxfield owns shares of Bank of America. The Motley Fool owns shares of Bank of America, JPMorgan Chase & Co., and Microsoft. Motley Fool newsletter services recommend Microsoft. 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.