MENU

What’s Behind the Dow’s 175-Point Jump

A day after adding 115 points, the Dow Jones Industrial Average (DJINDICES: ^DJI) surged for a second consecutive day after remarks from Federal Reserve Chairman Ben Bernanke again rallied stocks. The Dow rose 175 points — its fourth straight 100-point move — to end at a five-year high of 14,075.

Bernanke’s comments buoyed shares in financial companies such as JPMorgan Chase (NYSE: JPM), which added 3.5% to lead the Dow higher. The chairman indicated that interest rates will remain low for the near future; lower rates should encourage more borrowing that will in turn facilitate and encourage projects that help the economy. Bank of America/Merrill Lynch also issued a buy rating on JPMorgan shares, with a price target of $55.

Only one of the Dow’s 30 components, Hewlett-Packard (NYSE: HPQ), was down for the day, which should indicate how robust today’s market was. HP, losing only 0.1%, was one of the biggest gainers in the index the day before, adding nearly 4% after the company announced that it will be going with Google‘s Android OS on future tablets.

Thankfully, one stock that isn’t a part of the Dow is Groupon (NASDAQ: GRPN). Although shares surged nearly 8% Wednesday before its earnings announcement, they were to plunge shortly thereafter, and are down as much as 25% in after-hours trading. Groupon both lost $81 million in the fourth quarter and issued guidance for the first quarter that was far below Wall Street estimates. The double-whammy has proved calamitous for shareholders in the daily deals site.

Another struggling company, J.C. Penney (NYSE: JCP) , lost an incredible $522 million in the fourth quarter, more than six times the $87 million it lost in the quarter just a year earlier. Showing what dire straits the retailer is in, sales also fell 28% in just a year, while comparable-store sales contracted more than 30%. The stock, up moderately during the day, fell more than 10% after the bell.

Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. This article was written by John Divine, and was previously published on fool.com.  John is a contributor at fool.com and has no position in any stocks mentioned. You can follow him on Twitter,   @divinebizkid . The Motley Fool owns shares of Bank of America, Google, and JPMorgan Chase & Co..