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Dow power returns on strong earnings

The old-fashioned Dow regained its power Tuesday, outpacing the more popular, betterperforming Nasdaq composite that’s filled with innovative tech companies.

The resurgence of the Dow Jones industrial average, which Tuesday was briefly above its record high and jumped 100 points, or 0.5% (vs. a flat day for the Nasdaq), was fueled by strong earnings from high-profile Dow components including heavy machine maker Caterpillar, fast-food giant McDonald’s and agriculture and chemical play DuPont. At the close, Caterpillar shares rose 5.9%, McDonald’s jumped 4.8% and DuPont gained 1.4%. (Those gains were offset by losses in Dow components 3M, which fell 5.1% after a slight miss on quarterly sales, and a 2.1% drop for aircraft engine maker United Technologies despite strong results.)

This year has been all about the Nasdaq (it’s up 19.1% in 2017 vs. a 9.4% gain for the Dow) and its strong-performing stocks such as Facebook, Amazon, Apple, Netflix and Google parent Alphabet. But for at least a day, the Dow’s “old-economy” stocks outpaced the Nasdaq.

While the Dow taking the market lead for a day isn’t necessarily a sign it will outshine the Nasdaq on a more regular basis, the fact global companies such as Caterpillar are reporting economic strength is a “positive” for a market trading at elevated prices and heading into a weak seasonal period, says Bruce Bittles, chief investment strategist at Baird.