Investors woke up to a quick kick in the portfolio this morning as the market reacted strongly to a March hiring slump. The Dow Jones Industrials Average (INDEX: ^DJI ) closed down 1% for the day, relatively unchanged from where it opened in early trading.
Here's a look at how the three major indices fared, as well as three components that took the news the worst today.
Gain / Loss
Gain / Loss %
|Dow Jones Industrial Average||(130.6)||(1%)||12,929|
Should we zig or zag?
Today's negative performance contrasts with the recently rosy numbers out of the retail sector. We'd seen retailers from The Gap to Macy's crushing sales expectations on the backs of unseasonably warmer winter weather that brought the recently frugal consumer out of hibernation. Unfortunately for investors, real job growth goes a lot further toward long-term economic prosperity than a few more tanks and T's flying off the shelves. Today's sell-off, seems justified -- or is it?
While the 120,000 jobs created in March was below the six-month average of 200,000, the unemployment rate still fell to 8.2%. What's better, the unemployment level for those involuntarily working part-time and those discouraged from even seeking a job fell from 16.4% to 14.5%. Although unemployment remains stubbornly high, and it could be a long time before it reaches the 6% threshold we'd all love to see gain, there are some bright spots in today's report.
- Bank of America closed 3.25% lower today, eating into its title of winningest Dow stock year-to-date. Fortunately, the company is still up more than 60% for the year, and fortunately for investors there are still a lot of Fools who are bullish on banking. A long-term track to big returns would include a shoring up of its balance sheet, and an increase in dividend payments, just to name a few things. The good news is that even after this three-month run, the big bank still looks cheap.
- Disney was the second worst performing Dow stock today, losing 2.25% at market close. There was news today that other media juggernaut, News Corp., announced its intentions to build a network to rival Disney's ESPN. While it will be tough to unseat the champion in the sports-network arena, News Corp. is no pushover. It already has its Fox Sports network, which could provide the foundation for something more meaningful.
- Caterpillar wasn't spared from the mayhem, either, and fell 2.2% today. Unfortunately for some of us at the Fool, we named it our top Dow stock of 2012, and though it's still near the top of the year-to-date pack, a few big down days like this could change our tune. If you're still bullish on huge emerging-market growth in the future, then today could be a great opportunity to pick up this highly cyclical but essential heavy-equipment manufacturer on the cheap.
How to play it
In the past few sessions we've seen the Dow fall from previously lofty year-to-date levels, and the Volatility Index (INDEX: ^VIX ) is quickly jumping higher -- today alone it climbed 12.6%. It's environments like this that remind us the value of investing in quality companies for the long term. That's why our chief investment officer elected one big-growth retailer to be "The Motley Fool's Top Stock for 2012."
You can learn more about this top pick today.