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Why the Dow Is Plummeting Today

The hits just keep on coming for the Dow Jones Industrial Average (INDEX: ^DJI  ) . Fresh off its worst month in two years, the Dow dropped today into negative territory for the year after a dismal U.S. jobs report. Not only did payrolls increase by just 69,000 in May, their lowest increase in a year, but April's jobs number was revised significantly lower than initially reported. The unemployment rate rose from 8.1% to 8.2%, its first increase since June 2011.

But the jobs report was far from the only negative news today for investors. U.S. manufacturing growth slowed in May, and data showed that the eurozone manufacturing sector continues to contract, falling to a three-year output low. Manufacturing growth also came in lower than expected in China, prompting renewed calls for the government to step in with a more pro-growth agenda.

Not surprisingly, all of the Dow's 30 components are in the red on the day, with some faring much worse than others. Bank of America (NYSE: BAC  ) is among the three biggest losers on the day, down around 4% in early afternoon trading. One of the worst-performing sectors today is financials, which tend to be more sensitive to the U.S. and global economy. American Express (NYSE: AXP  ) and JPMorgan Chase (NYSE: JPM  ) have now dropped around 4% and 3%, respectively. Still, it could be worse for some investors; Bank of America and American Express are still up 26% and 13% year-to-date, respectively, solidly outperforming the Dow.

Outside the Dow, Facebook (Nasdaq: FB  ) couldn't escape the carnage, either, as the stock dropped over 5%. Investors will be hoping for a repeat of yesterday, in which the stock rose from -4% in early afternoon trading to finish up 5% at the closing bell. But that doesn't seem likely. In addition to the terrible data for the economy as a whole, investors continue to question Facebook's ad-based revenue model and its inability to monetize its mobile traffic.

The big picture
While it's fun to follow what happens with volatile stocks like Facebook, it's also important not to get too worked up about what happens in the short term. The most successful stock picks are usually great businesses that grow over time. Our analysts have uncovered one such company in our new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. You can get instant access to the name of this company by clicking here -- it's absolutely free.

Brendan Byrnes owns shares of Caterpillar. The Motley Fool owns shares of Facebook, Bank of America, and JPMorgan Chase. Motley Fool newsletter services have recommended creating a write covered strangle position in American Express. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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S&P 500 2,133.04 -6.39 -0.30%
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Related Tickers

10/27/2016 4:35 PM
^DJI $18169.68 Down -29.65 -0.16%
AXP $66.93 Up +0.13 +0.19%
American Express CAPS Rating: ****
BAC $16.91 Up +0.04 +0.24%
Bank of America CAPS Rating: ****
FB $129.69 Down -1.35 -1.03%
Facebook CAPS Rating: ***
JPM $69.23 Up +0.10 +0.14%
JPMorgan Chase CAPS Rating: ****