The Dow Jones industrial average swept past 14,000 for the first time on Tuesday, July 17.
S&P and NASDAQ were also trading high. If you take a close look at today's stock market, stocks rallied on cyclical stocks, such as railroad stocks, industrial (CAT, GE, DE…), and technical stocks. AXP (American Express) is the one of few non-cyclical stocks gaining in the market.
What caused cyclical stock rallying? Oil prices have moved up tremendously and alternative energy is inevitable, especially ethanol fuel. Ethanol is produced by fermentation of sugar or starch. The main source of bio-ethanol fuel in the United States lies in corn. Corn has thus become a very profit commodity, this is a classical demand and supply scenario. When the farmer has excess money in hand, he will buy better and faster growing seeds from companies such as Monsanto (MON), fertilizer from Agrium (AGU), agriculture machinery from John Deer (DE) or Caterpillar (CAT). Furthermore, they need railroads to transport the products. In addition, most of the new ethanol plants dotting the Midwest are gas-fired. In the mean time, corn growers are using much more fertilizer, which is produced using natural gas; gas company XTO energy (XTO) was also participating in today's rally.
