These Winners Couldn't Send the Dow to Another Record

If you look through some explanations of why the Dow Jones Industrials failed to set a new record today, you'll find a common theme: Investors are worried about a potential correction. Yet the problem with that hypothesis is that investors have been worried about a correction for months now, if not years, and the market hasn't hesitated to climb higher regardless. With a decline of just 19 points for the Dow and similarly insignificant declines for the broader market, reading too much into the day's activity will lead you to false conclusions about what in reality isn't any change in sentiment among investors.

Moreover, focusing too much on pessimistic sentiment will distract you from pockets of optimism within certain sectors. For instance, Alcoa climbed 1.7% today as investors continued to applaud the company's decision last week to shut down two of its Canadian production lines and to delay the construction of a new line for at least six years. With aluminum prices remaining stubbornly weak, Alcoa's move at the Baie-Comeau smelter in Quebec represents the latest in a series of strategic decisions designed to reduce overall supply and support long-term price increases for the metal. Even though it will take time for conditions to improve, Alcoa has demonstrated its willingness to make tough decisions in order to put itself in the best position to benefit from favorable long-term trends toward greater future use of aluminum.

American Express picked up 1.5% on a quiet day on the news front from the credit card giant. As Fool contributor Dan Carroll pointed out earlier today, AmEx stands to benefit from increasing confidence from consumers, as its profits depend on maximizing transaction volumes. With delinquencies having fallen dramatically in recent years, AmEx stands to see more of its revenue make its way to its bottom line. Also, AmEx's strategy to reach out to lower-income cardholders through its Bluebird offering could well pay off with a broadening customer base for offering other higher-margin services.

Finally, beyond the Dow, Peregrine Pharmaceuticals jumped 19% on news that it had decided to run a phase 3 trial of its bavituximab lung-cancer treatment. The company's characterization of its having "reached agreement with the FDA" might have been confusing to some investors, as the stock had been up more than 30% earlier in the day before falling back as investors had time to consider the true impact the study could have on Peregrine. As Fool contributor Brian Orelli pointed out earlier today, Peregrine's dwindling cash balance might have led the company to choose to accelerate its research in an attempt to get the drug through the FDA approval process more quickly.

Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant, simply click here now to get started.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express. 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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