Economic Data Pushes Markets Higher -- Except for These Few Stocks


As of 12:45 p.m. EDT the Dow Jones Industrial Average is up 0.53%, putting it just five points shy of 15,300. The S&P 500 is up 0.65%, while the Nasdaq is running in third, up just 0.36%. Investors are once again bullish today thanks to some encouraging economic data.

This morning the Department of Labor released data indicating that producer prices fell 0.7% in April, which is their largest drop in three years. Two reasons for the large decline were lower gasoline prices and falling food costs. According to a Reuters survey, economists were expecting a decline of 0.6%. This report may be seen more negatively with regard to higher revenue and profits for large companies, but it's a good thing for consumers, as they will likely have more money in their pockets after buying the essentials.

Additionally, homebuilder confidence has increased in May. The National Association of Home Builders reported that sales expectations have risen to their highest level in five years.

But even though the markets in general are moving higher today, a few losers can still be found.

Shares of Chevron are lower by 0.5% this afternoon. The producer price report is likely causing some of the decline, in addition to a 1.3% drop in the price of light crude and a 2.1% drop in the price of unleaded gas. Big oil companies are essentially at the mercy of the price of oil, and when prices dramatically fall, revenue and profits tend to go along for the ride. But investors need to focus on the long-term picture, not short-term or daily moves, if they own shares of any commodity-based business.

Both Caterpillar and Alcoa are trading lower after two reports indicating that manufacturing is slowing were released today. The first was the industrial-production rate, which fell 0.5% in April, whereas many analysts were only expecting a 0.2% dip. On the positive side, though, the production rate was revised higher to a 0.3% increase in March. Further bad news for Alcoa was that the industry capacity utilization fell to 77.8% in April after hitting 78.3% in March. This report indicates the extent to which companies are deploying their resources. None of the data released today paints a good picture for either Caterpillar or Alcoa, and investors are trading out of each stock today, causing shares to fall about 0.5% each.

Nevertheless, Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in The Motley Fool's brand-new report. Just click here to access it now.

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Fool contributor Matt Thalman has no position in any stocks mentioned. The Motley Fool recommends Chevron. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513. 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.

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