Why the Dow's Falling Off Today

If you've ever had a day where you started off strong but lost steam after lunch, you can relate to how the stock market is behaving today. Stocks continue to get pounded by volatility from earnings season, European sovereign debt pressures, and economic uncertainties in the U.S., as existing home sales defied expectations by dropping in March. Declines accelerated into the afternoon, and at around 2:45 p.m. EDT, the Dow Jones Industrials (INDEX: ^DJI  ) were down 119 points to 12,913.

Defying the down move was Travelers, which jumped more than 4% after announcing strong quarterly results. After a disastrous 2011, the insurance company seems to be on track for a better 2012, as often happens once insurers are able to renew insurance policies at higher rates that reflect their recent loss experience. Even just a normal year could help Travelers become a lot more profitable than it was in 2011.

But on the financial front, JPMorgan Chase was down about 1%, while Bank of America sank more than 2% after releasing earnings that failed to answer broader questions about the future of the industry. Today's results of a Treasury auction of inflation-indexed bonds supported the idea that low rates could be here for the foreseeable future, as the five-year TIPS went off at a negative real yield of -1.08% -- implying fairly low inflation expectations in the coming years. Without inflation fears to push long-term rates up, the yield curve could flatten, eventually having a negative impact on banks' net interest income.

Stay tuned
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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 Bank of America and JPMorgan Chase. 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.


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