In my Friday market preview, I mentioned that the outcome of last Friday's nonfarm payroll report would set the tone for June trading, and boy was I right! The payroll number missed expectations by a mile, and equity markets sold off in dramatic fashion. The Dow Jones Industrial Average (INDEX: ^DJI ) fell 275 points, or 2.2%, while the S&P 500 and Nasdaq indexes shed 3% and 3.2%, respectively. The Dow is now down 8.7% from highs not seen since late 2007, and there appears to be no end in sight to the bad news. After all, Europe is reeling, China is slowing, and the last week saw 18 of 21 U.S. economic data reports fall below expectations. What's an investor to do in times like these? After all, we haven't seen anything like this before -- or have we?
^DJI data by YCharts.
As the chart above shows, investors shouldn't be shocked by a summer sell-off. After all, this is the third summer in a row that we've experienced summer weakness sparked by the European crisis. In both 2010 and 2011 we experienced corrections, and both times the market bounced back en route to making new multiyear highs. Warren Buffet once said, "In the business world, the rearview mirror is always clearer than the windshield." The future certainly looks unclear, but as we've seen in the past, you can never count out a little government liquidity to get the wipers working again.
One company that has ignored the recent sell-off is Wal-Mart (NYSE: WMT ) . Despite being in the midst of a bribery scandal at its Mexican subsidiary, the company has ridden economic fears to an 11% gain in the past month. The company is viewed as one of the most defensive consumer stocks out there, and as the nation's largest retailer of consumer staples like groceries, an economic slowdown is actually considered a boon for business. Another retailer for the cost-conscious consumer, Dollar General (NYSE: DG ) , saw its stock price increase in the past month as well. While the company's 1% rise doesn't measure up to Wal-Mart, investors will be looking for shares to get a boost from the company's first-quarter earnings release tomorrow afternoon.
On the other end of the spectrum we have Caterpillar (NYSE: CAT ) , down nearly 17% in the past month. Recent economic fears have only magnified investor concerns for Caterpillar, which, as the world's largest heavy-equipment maker, is exposed to slowdowns in infrastructure spending and lower commodity prices worldwide. Another stock driven down by low commodity prices -- as well as investor outrage -- is Chesapeake Energy (NYSE: CHK ) . Management malfeasance will be the topic du jour this Friday, when the company hosts its annual shareholders meeting in Oklahoma City. Activist investor Carl Icahn is pushing for the company to add four shareholder-designated board members in an effort to shore up corporate governance.
With Europe in turmoil, banks destroying investor trust once again, and the stock market giving back all of its gains for the year last week, the urge to take a short-term view can be hard to resist. However, the best investors understand the opportunity difficult times present to those with a long-term focus. Removing emotion from your investment decisions is just one of the keys to successful investing, and in this special free report we highlight other savings habits investors can use to build long-term wealth. In addition, we introduce three companies we believe make a perfect addition to a smart retirement portfolio. This limited-time report is entitled "3 Stocks That Will Help You Retire Rich," and you can grab a free copy today by clicking here.