Morning Dow Report: Why Today's Rally Is About More Than Banks

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market this morning built on the upward momentum it created yesterday, with the Dow Jones Industrials picking almost 100 points as of 11 a.m. EST. Although much of investors' attention focused on the financial industry, where earnings have provided an upbeat view of the economy and the market, other big pockets of strength helped the Dow today. In particular, telecoms Verizon and AT&T posted sizable gains, while even lagging industrial giant Caterpillar weighed in with a good performance.

Verizon and AT&T were both up between 1% and 2% after a key federal appeals court ruling that the FCC had overstepped its authority in imposing net neutrality rules on Verizon. As a result of the decision, Verizon, AT&T, and other Internet-service providers will be able to charge different rates to various content providers, allowing them to use price discrimination against high-volume users like streaming video services. The big question is whether the decision will allow the ISPs to compete more effectively with their own content-delivery services, potentially creating exactly the anticompetitive environment that the FCC had hoped to avoid. For now, though, telecom investors see potential profit gains as a result of the decision -- absent an appeal to the Supreme Court or other steps the FCC could take to limit the impact of the ruling.

Meanwhile, Caterpillar soared nearly 2% as hopes emerge that the long-dormant construction and infrastructure industries could finally start to pull their weight in the economic recovery. Appearing before the House Transportation and Infrastructure Committee yesterday, a Caterpillar executive urged lawmakers to make necessary upgrades to the nation's infrastructure system in order to help U.S. industry compete globally. With the perception that other countries are gaining a lead in infrastructure, and with cheap energy supplies bringing the potential for a return of manufacturing facilities domestically, Caterpillar hopes that a turnaround in activity will help bolster its own flagging revenue. Favorable news from the Federal Reserve Bank of New York about manufacturing activity in the New York region also raised hopes for the company.

Finally, outside the Dow, expect dividends to continue being an important part of any stock market advance. General Motors gave investors welcome news late yesterday, reinstating a dividend for the first time since emerging from bankruptcy and paying a 3% yield. The stock fell 2% this morning on other news that GM expects only modest growth this year, but nevertheless, the marketwide trend toward higher dividends should give investors enthusiasm going forward.

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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 General Motors. 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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