Why the Dow's Resisting Good Economic News
It's been a flat day on the Dow Jones Industrial Average , as the index has been unable to capitalize on positive GDP news for the third quarter. As of 2:20 p.m. EST, the Dow has gained 31 points, or 0.24%, weighed down by ongoing drama on Capitol Hill over the fiscal cliff. Most Dow stocks are in the green, but two of the day's big losers are keeping the index from climbing higher.
The Capitol Hill circus marches on
Earlier today, House Speaker John Boehner delayed a vote on the Republican plan to limit tax hikes to personal incomes above $1 million, moving it from this afternoon to Thursday evening. While some expect the vote to pass the House, President Obama has already said he will veto such a motion -- and it's doubtful that this is indicative of a real solution to the fiscal cliff just yet. However, good economic news managed to counter the fiscal cliff gloom.
It was reported this morning that U.S. gross domestic product rose 3.1% for the third quarter. That didn't help embattled Caterpillar , however: The industrial giant's stock has fallen 1% to rank among the top Dow laggards on the day. Caterpillar's sales growth slowed significantly in November, and despite today's positive notes on the economy, more deadlocking on the fiscal cliff could make things even worse for Caterpillar until a real deal is found.
Even Caterpillar's losses today couldn't match the day's top Dow laggard, pharmaceutical giant Merck , which is down 3.2%. The company's cholesterol drug Tredaptive failed in a clinical study, and Merck now says it won't pursue FDA approval. While Tredaptive is already approved in Europe, EU regulators are launching a review of the drug.
Financials rising
Still, most stocks are hitting high notes today. Bank stocks have had a great day: Bank of America's gains of 2.3% lead the Dow, and JPMorgan is up 1.8%. Bank of America is on the verge of hitting a new 52-week high, having gained 116% over the past year to become the Dow's best stock in 2012.
Aerospace giant Boeing is also on the rise, with shares up 0.7% so far. The stock has continued its climb since announcing a hike in its quarterly dividends and a continuation of its share buyback program, drawing income investors and growth investors alike to the stock.
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