Why the Dow's Stuck in the Mud

Negative sentiment toward the stock market has dominated trading throughout May, and unfortunately for those looking for a respite from recent declines, this morning has thus far proved to be no exception. With 10 down sessions in the past 11 trading days, the Dow Jones Industrials (INDEX: ^DJI  ) fell coming out of the gate this morning, with a loss of about 0.3% just before 10:45 a.m. ET. Although U.S. jobless claims data that showed a stable employment picture might ordinarily have pushed the market higher, the highly uncertain status of the eurozone continues to weigh on the markets.

JPMorgan Chase (NYSE: JPM  ) was once again a big loser in the Dow, dropping more than 2% on reports that its derivatives trade gone wrong may have produced an additional $1 billion in losses. With the bank already having disclosed losses of $2 billion, investors have to be concerned that JPMorgan may be at the mercy of competitors seeking to take the other side of its trade and take maximum advantage of its problems.

But Caterpillar's (NYSE: CAT  ) losses were even bigger, adding another 3% drop to its recent pullback. News from mining giant BHP Billiton (NYSE: BHP  ) that the company plans to cut back on its proposed expansion plans shows how commodity producers are getting increasingly pessimistic about future growth prospects. That in turn could hurt Caterpillar's sales of mining equipment, on top of macroeconomic headwinds hitting its construction equipment business.

Finally, Wal-Mart (NYSE: WMT  ) soared more than 5% in early trading as the retailer announced earnings that beat both its own projections and analyst estimates. Same-store sales jumped 2.6%, nearly doubling what Wall Street had expected. The move shows that despite the bad publicity from its Mexican bribery scandal, Wal-Mart can expect its stock to respond more to the fortunes of its business in the long run.

More woes ahead?
In a down stock market, you need the best ideas you can get. Let me suggest taking a look at a special report from The Motley Fool, in which the Fool's chief investment officer reveals a stock he has hand-selected and named The Motley Fool's top stock for 2012. Grab your copy free for a limited time. You can get access to the report and find out the name of this legendary company -- but don't wait; do it right now.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter. The Motley Fool owns shares of JPMorgan Chase. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 (0) | Recommend This Article (2)

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.

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: 1889359, ~/Articles/ArticleHandler.aspx, 11/24/2014 4:37:45 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...


Advertisement