Dow Futures

After falling in nine out of the last 10 days, the Dow Jones Industrials (INDEX: ^DJI  ) are finally taking a solid step forward this morning, rising almost half a percent as of 10:55 a.m. EDT. Some commentators pointed to positive economic news on new home sales, although the problems in Europe still hang over the stock market and will likely keep investors nervous at least until next month’s newly scheduled elections in Greece. Gold and oil both fell again, but the 10-year Treasury rate (INDEX: ^TNX  ) rose back above the 1.8% level in morning trade.

General Electric (NYSE: GE  ) was the big winner in the Dow, soaring more than 3% after announcing that its GE Capital unit would pay a special dividend of $4.5 billion to its corporate parent this year. The move marks another milestone in GE’s recovery from the financial crisis, as GE Capital stopped paying its dividend to GE back in 2009 in order to conserve cash.

On the down side, Microsoft (Nasdaq: MSFT  ) fell slightly despite a report from Forrester Research yesterday that said that the company is in the best position in the competition among tech giants to build a strong TV presence. Forrester pointed to the company’s Xbox platform, which Microsoft has used to pull in a substantial audience and which provides a valuable conduit for content delivery.

Finally, JPMorgan Chase (NYSE: JPM  ) was up almost 1% despite having shareholder lawsuits filed against it yesterday over its massive trading loss. Although there’s nothing surprising about the suits, JPMorgan investors should expect plenty of volatility in the coming months as the controversy works its way forward through the legal system as well as in the court of public opinion.

Is the correction over?
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Global stock markets have been an absolute mess lately. With renewed anxiety over Europe’s, and especially Greece’s, dedication to meeting key austerity targets, investors fled for the exits, leaving the Dow Jones Industrial Average (INDEX: ^DJI  ) down more than 3% in the past five days alone. Despite the carnage, some glimmers of hope certainly still exist among specific stocks. Andrew highlights three stocks that bucked the trend today and actually posted strong results. Watch the video to learn more about three of the biggest winners on the market today.

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Foolish bottom line
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The Dow Jones Industrials (INDEX: ^DJI  ) fell again today, closing down 125 points, or about 1%, on an increasingly bleak outlook in Europe. If May trading was a boxing match, the equity markets left Round 10 wobbling back to their corner. That’s not to say the Dow didn’t get in a couple of good punches, though. In fact, the Dow landed a nice jab from Merck (NYSE: MRK  ) and a solid cross from Cisco (Nasdaq: CSCO  ) today. Unfortunately, 27 of the 30 Dow components couldn’t handle the barrage of uppercuts coming out of Greece.

Even though the only “winning” going on today had more in line with Charlie Sheen than the 1996 Chicago Bulls, let’s go through some of the top performances.

Networking company Cisco overcame today’s broad-based weakness to post a 1.27% gain on the day, leading all Dow components. While the relative outperformance was a likely reversion to the mean following a sharp sell-off last week, it’s an encouraging sign that shares have perhaps found near-term support at current levels. Joining Cisco in positive territory today was pharmaceutical giant Merck, rising 0.45%. With Treasuries trading at record low yields, Merck’s hefty 4.4% dividend yield and health-care exposure provided a relatively defensive safe haven for investors looking for limited risk and yield.

Away from the Dow, shares of Groupon (Nasdaq: GRPN  ) soared 18.5% in anticipation of their first-quarter earnings announcement after the market closed. The results were encouraging, with revenue surging 89% versus analyst expectations of 79% growth and earnings per share of $0.02 coming in line with the consensus outlook. Better yet, revenue guidance for second quarter of $550 million to $590 million came in 5% above current estimates on the high end of the range. Will this news shed the daily-deals juggernaut of its “dog” status? Investors appear to think so, with shares up an additional mid-teens percentage in after-hours trading. At that rate, shares will begin tomorrow’s trading more than 35% above Friday’s closing price.

Also performing well today on encouraging news was a company best known for its share of negative headlines lately. Chesapeake Energy (NYSE: CHK  ) shares rose 4.8% on the day as investors took comfort that former large shareholder, notorious bargain hunter, and, perhaps most importantly, activist investor Carl Icahn has taken another large stake in the natural gas producer. Shareholders needed the reprieve, too, as shares took a nasty 14% hit Friday following liquidity concerns, which have since been addressed by a $3 billion loan from Goldman Sachs and Jefferies.

If you’re interested in energy stocks but, like most investors, wouldn’t touch Chesapeake Energy with a 10-foot pole, I invite you to read our latest report, titled “The Only Energy Stock You’ll Ever Need.” Inside, our analysts detail one 150-year-old oil-services company well positioned to succeed through its portfolio of innovative products and services. This report will only be available for a limited time, so pick up your free copy today.

The Dow Jones Industrial Average (INDEX: ^DJI  ) fell nearly 1% today after the new Greek parliament failed to form a coalition government. With political opposition mounting, it’s becoming increasingly likely that Greece will exit the eurozone rather than see its economy destroyed through austerity. Although in the end the country may have no other choice, leaving the eurozone would be a logistical nightmare for the country and would put further strain on European banks.

Naturally, bank stocks led the plunge today, with JPMorgan Chase (NYSE: JPM  ) and Bank of America (NYSE: BAC  ) falling 3.2% and 2.7%, respectively. Like most “too-big-to-fail” banks, the two have large investment-banking and trading exposure to global capital markets. JPMorgan generated $10.4 billion (39%) of its pre-tax profits from investment banking, whereas B of A earns $5.7 billion in its global banking business.

Citigroup (NYSE: C  ) , which in addition to its investment banking operations also has significant international operations (nearly a quarter of last-year’s profits were from Europe), fell more than 4%.

What’s more, JPMorgan announced late last week that it expects to lose $2 billion on a derivatives trade gone wrong. Since JPMorgan, along with Goldman Sachs (NYSE: GS  ) , is regarded as one of the most competent banking behemoths, the blowup tarnished not only its image, but also that of the larger trading industry.

In short — stocks could be in for a bumpy ride in the near term while Europe enters the next phase of its slow-motion financial crisis. For long-term investors, this will eventually pass. And by starting to reverse the current course of unsustainable austerity, Europe and the U.S. have a better chance of avoiding worse outcomes.

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The Dow Jones Industrials Average (INDEX: ^DJI  ) got sucker-punched early this morning and fell down over 1%, but it’s recovered about half of the lost ground and is now trading down 0.98%. It’s the same old song and dance that we’ve seen for months now: Europe, with a dash of concern about slowing growth in China. At this point many investors feel like they’ve been watching “My Big Fat Greek Blowup” on repeat and could probably recite most of the lines; debt here, political impasse there, turmoil in the streets, you get the idea.

These worries have flowed through to economically sensitive sectors like banking and energy, with both being the two worst performing sectors today.

It’s not just Europe
The weakness that’s being seen in the banking sector can’t be squarely placed on the shoulders of the Greeks though, as JPMorgan (NYSE: JPM  ) deserves its fair share of the credit as well. The banking giant recently unveiled a $2 billion trading loss and Chief Investment Officer Ina Drew has “retired” on the news. Shares of the bank have skidded hard since last Thursday’s announcement, and continue to drag the broader banking sector with it.

JPMorgan is trading 3.14% lower and Bank of America (NYSE: BAC  ) is down 2.38%. Off the Dow, Citigroup (NYSE: C  ) is dropping 4.29% and Wells Fargo (NYSE: WFC  ) is down 2.5%. Dow Jones investors should consider themselves just a little lucky that financials only make up 9.9% of the index, though, which is far lower than the weightings they’d find on other broad indexes like the S&P or Russell.

At the end of the day I’m of the belief that banking remains incredibly cheap right now. The big finance heavies continue to trade at deep discounts to their historic price-to-book ratios. With that said, though, this sector isn’t for those with a weak stomach. Banking will likely continue to be a volatile sector over the next few years. With more regulation a possibility right alongside more potential balance-sheet landmines in the form of mortgage defaults, the level of uncertainty remains high. For those with a high risk tolerance and a long-term horizon, though, financials may be the best sector for you to be in.

One other option
If you’re still bearish on finance stocks, though, you’re not alone, and there are still huge opportunities out there, including one stock our chief investment officer named The Motley Fool’s Top Stock for 2012. You can learn more about this emerging market retailer before the Wall Street hot shots are keen to the opportunity by just clicking here for your copy of our special free report.