Why the Dow's Falling Hard This Morning

Investors can't make up their minds. Earlier this week, the stock market gave up ground in the biggest plunge of the year. Then two days of gains reversed many of those losses. Today, though, worries are again taking center stage, as China's GDP growth came in slower than expected and higher food and gasoline prices helped spark the Consumer Price Index to a 0.3% jump. As of around 10:45 a.m. EDT, the Dow Jones Industrials (INDEX: ^DJI  ) were down 98 points to 12,888, while the S&P 500 (INDEX: ^GSPC  ) fell 13 points to 1,375.

All but two of the Dow's components traded lower. As you'd expect, among the hardest-hit were the economically sensitive Alcoa (NYSE: AA  ) and Bank of America (NYSE: BAC  ) . Alcoa needs a strong Chinese economy to support aluminum prices and eventually bring back greater profitability, even though strong levels of aluminum output within China are among the culprits holding prices back.

B of A, on the other hand, could get hurt from reports of weaker consumer sentiment. Its credit card business relies on consumer spending, and loan activity is also driven by sentiment. Although Wells Fargo (NYSE: WFC  ) beat earnings expectations this morning, those results weren't enough to keep its own shares from dropping -- and B of A still needs to establish that it's in equally good shape as Wells Fargo.

Enjoy the roller coaster!
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Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter here. The Motley Fool owns shares of Wells Fargo and Bank of America, and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo. 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 Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (14)

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.

  • Report this Comment On April 13, 2012, at 11:15 AM, DrRoberts1 wrote:

    Hey Dan, do you actually believe BAC will EVER be in as good as shape as Wells Fargo, one of the best run banks in the country, if not the best (with apologies to Jamie Dimon).

  • Report this Comment On April 13, 2012, at 11:28 AM, mrkrazyk wrote:

    You people at Motley Fool are complete morons

  • Report this Comment On April 13, 2012, at 11:52 AM, TMFGalagan wrote:

    @DrRoberts1 -

    I'm no bank analyst, but I think BAC *could* be among the best. It has a lot of baggage right now, but I like the brand. Certainly if you got somebody like Dimon or Stumpf over there, I think you'd see some much different things happening.

    best,

    dan (TMF Galagan)

  • Report this Comment On April 13, 2012, at 11:55 AM, mobil21 wrote:

    It is hard to focus on the long term investing when everything I own has headed south. I have been at this only a short time, and have concluded that the direction of the market has nothing to do with the underlying stocks, but only based on fear and rumors.

    One reason the market is down today is because China's grown was only 8 plus percent The US would turn cartwheels for that kind of growth.

  • Report this Comment On April 13, 2012, at 12:14 PM, promommyfool wrote:

    Mobil21,

    I hear you, only been in this for about 3 years. The three yuckiest years it seems and I had to finally let go of several stocks that have died rather than bounced back from the drop. Others I keep because the names are good and I'm hoping they will be something other than penny stocks again one day.

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