Stock market power returns on strong earnings reports – USA TODAY

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

The resurgence of the Dow Jones industrial average, which Tuesday hit a new high and jumped 125 points, or 0.6% (vs. a 0.1% rise 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 1 p.m. ET Caterpillar shares rose 5.5%, McDonald’s jumped 4.4% and DuPont gained 1.3%. (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% in 2017 vs. a 9%-plus gain for the Dow) and its strong-performing stocks like 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 like Caterpillar are reporting economic strength is a “positive” for a market that’s trading at elevated prices relative to earnings and that’s heading into a weak seasonal period, says Bruce Bittles, chief investment strategist at Baird.

“Overall stock market action is bullish for the economy as I believe the stock market has the best record in forecasting the economy,” he says.

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