Why The Dow Tanked Today

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The Dow Jones Industrial Average (INDEX: ^DJI  ) plunged more than 200 points today, for a whopping 1.6% loss, by far its biggest in 2012.

Greece is once again in the news amid concerns that not enough investors will go along with a March 20 bond swap that is needed for the country to meet the amount it owes. If not enough investors agree to participate, Greece could force a majority-wins vote, but that could trigger credit-default-swap payments and rattle financial markets.

Cyclical materials and construction stocks Alcoa (NYSE: AA  ) and Caterpillar (NYSE: CAT  ) took the brunt of the market selloff, for a repeat performance as the two worst-performing Dow stocks. The ongoing crisis in Greece, with its potential to spill over into Europe if not properly handled, may be the most prominent threat to the global economy, but two others have been rearing their heads lately. Yesterday, China's premier reduced its GDP target from 8% to 7.5%; and the potential showdown with Iran has elevated oil prices, temporarily taking the wind out of construction and manufacturing.

Naturally, bank stocks took it on the chin, too. The big five banks, Citigroup (NYSE: C  ) , Goldman Sachs, Morgan Stanley, Bank of America (NYSE: BAC  ) and JPMorgan Chase, reportedly have a combined $80 billion in exposure to troubled European debt, though they're relying on credit default swaps to hedge that exposure down to $50 billion. Trading has been one of the weakest areas in banking lately, and an exacerbated financial crisis won't help matters one whit.

Hopefully, none of these risks to the economy will materialize, but if things continue down this path we may see cheaper stocks and another buying opportunity. If you're interested in one stock that our chief investment officer picked to crush the market, check out our brand-new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. For a limited time, you can get instant access to the name of this company for free by clicking here.

Ilan Moscovitz doesn't own shares of any company mentioned. The Motley Fool owns shares of JPMorgan Chase, Citigroup, and Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1801816, ~/Articles/ArticleHandler.aspx, 10/27/2016 9:18:26 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,199.33 30.06 0.00%
S&P 500 2,139.43 -3.73 0.00%
NASD 5,250.27 -33.13 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:39 PM
^DJI $18199.33 Up +30.06 +0.00%
AA $27.79 Up +0.50 +0.00%
Alcoa CAPS Rating: ***
BAC $16.87 Up +0.15 +0.00%
Bank of America CAPS Rating: ****
C $50.01 Up +0.42 +0.00%
Citigroup CAPS Rating: ***
CAT $84.13 Down -0.35 +0.00%
Caterpillar CAPS Rating: ***