What's Behind This Morning's Plunging Dow

One glance at the market's performance makes it look like something terrible happened over the weekend. Yet unless you're a Greek soccer fan, it's hard to point to anything terribly new that's giving investors heartburn. Sure, Europe is still up in the air, with the European Union having its summit later this week. And health-care investors are waiting impatiently for the Supreme Court's ruling on health-care reform. But none of that is particularly new -- yet the Dow Jones Industrials (INDEX: ^DJI  ) fell sharply at the open and were down more than 160 points just after 10:45 a.m. EDT.

As usual, the banking and construction areas of the Dow were hit hardest, with Bank of America (NYSE: BAC  ) , Caterpillar (NYSE: CAT  ) , and JPMorgan Chase (NYSE: JPM  ) leading the losers, all down around 3%. One of the big focuses of the economic summit in Europe is addressing the problems with Spain's banking system, and if European leaders can't figure out a credible way to nip those problems in the bud before they spread even further, the growing crisis would eventually pose a threat to both B of A and JPMorgan.

Meanwhile, Caterpillar's decline seems to be due simply to the troubles throughout the global economy. The construction equipment giant may not be entirely reliant on Europe, but it still counts on European demand to drive production in the U.S. as well as China and other faster-growing areas of the world. Just as General Electric (NYSE: GE  ) has had to restructure its operations in Europe in order to take better advantage of more promising business prospects elsewhere, Caterpillar needs to keep its focus where it can maximize its profits in order to reverse its precipitous share-price decline over the past few months.

Don't lose hope
Big plunges can be painful, but they're also opportunities for buyers. The Fool's latest special report can get you moving in the right direction, as it points the way to the three Dow stocks dividend investors need. The report is absolutely free, so just click here and get your copy today.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of JPMorgan Chase and Bank of America. 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 (0) | Recommend This Article (13)

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: 1923028, ~/Articles/ArticleHandler.aspx, 10/22/2014 10:41:16 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