Material Slowdown

To great fanfare on CNBC and other financial media, the Dow Jones Industrial Average crossed 13,000 for the first time this week. We wonder how long these thousand-point markers will continue to generate such excitement, since each successive one represents less of a gain from the previous. Going from 1,000 to 2,000 was a big deal because it meant the Dow had gone up 100%. Going from 11,000 to 12,000 took a 9.1% gain. The trip from 12,000 to 13,000 was only 8.3%. Another 7.7% will get the Dow to 14,000.

In any case, the strength in the Dow is mirrored in other benchmarks, with even the Nasdaq 100 finally picking up steam. Sector action is also becoming more interesting. Energy remains on top of the rankings with utilities not far behind. The materials sector lost some ground today as both Dow Chemical (DOW) and Newmont Mining (NEM) reported disappointing quarterly results. It appears the housing slowdown may be starting to show up in sales for the commodity producers. Pharmaceuticals are climbing up the ranks quickly and semiconductors are coming on strong as well.