Dow Moves Higher on the Backs of a Few Workhorses
It was a slow day for economic news. The Bureau of Labor Statistics' job openings number for May moved up just 1.4%, while the National Federation of Independent Business reported that small business optimism was slightly lower in June than it had been the month before. Still, these two mediocre results were enough to send the major indexes higher today. The Dow Jones Industrial Average rose 0.5%, or 75 points, and now sits at 15,300. The S&P 500 increased by 0.72%, while the Nasdaq gained 0.56% during the regular trading session.
Within the Dow, 26 of 30 components moved higher today, with all the winners led by Caterpillar , which gained 2.56% during the session. The move was a little unexpected, as there was relatively no company-specific news today. Volume was slightly higher than normal, with 7.8 million shares trading hands, while the average is only 6.7 million. The stock is down more than 4% on the year as concerns about the mining and construction industries worldwide have weighted on investors' minds. But with shares trading at just 11.5 times past earnings and 10.7 times future expected results, and with a current dividend yield of 2.9%, the stock seems extremely cheap.
Two other big winners today were Chevron , which rose 1.67%, and ExxonMobil , which increased by 1.18%, on the back of strong increases in oil (0.38%) and unleaded gasoline (1.47%). Also helping the two oil behemoths was the announcement that competitor Royal DutchShell has decided to name Ben van Beurden as the company's new CEO. Although van Beurden has been in the business for a long time, the surprise pick may be causing investors to believe that Chevron and ExxonMobil will outperform Shell in the future. Van Beurden has been a very low-profile guy who ran Shell's refining and marketing divisions and has been credited with turning around Shell's chemical division, but he hadn't been on very many people's radars as a candidate to replace CEO Peter Voser, who announced in May his plans to step down.
Lastly, shares of United Technologies increased by 1.07% today, after analysts at Drexel Hamilton increased their price target on the diversified machinery company. The new target of $110 per share and Drexel's reiterated "buy" rating came as the analysts believe United Technologies should trade at a higher multiple than the rest of its sector. Shares are currently trading at a price-to-earnings ratio of 14.68, while the expected future earnings ratio is only 14.12.
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The article Dow Moves Higher on the Backs of a Few Workhorses originally appeared on Fool.com.
Fool contributor Matt Thalman has no position in any stocks mentioned. 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. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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