The markets continued last night's fireworks show in today's news feed, with the Dow Jones Industrial Average (INDEX: ^DJI ) down slightly as of 1 p.m. after a deluge of global news. The European Central Bank slashed rates across the board, including lowering its main financing rates by 25 basis points to 0.75%, an all-time low. China surprised investors by following suit and lowering both its benchmark lending rates and deposit rates, while the Bank of England approved a 50-billion-pound stimulus plan.
Adrian Redmond, a senior trader for JN Financial, thought that the England stimulus was already factored into the markets, while "the China cut is quite significant." The fact that the three stimulus measures, along with better-than-expected job numbers in the U.S., drove the markets down comes as a surprise. Investors now seem to care more about results, not just central bank efforts. Enthusiasm from last week's EU summit, for instance, gave way to concerns that the eurozone is struggling more than many investors thought.
The U.S. jobs numbers do offer a glimmer of hope, but investors remain worried that the news tomorrow will be ugly. Although unemployment benefit applications dropped below the expected 385,000 to 374,000, that number often fluctuates for unrelated reasons. Analysts are being cautious about payroll provider ADP's report, which stated that businesses added 176,000 jobs. The ADP numbers and Labor Department reports often feature sharp discrepancies, and as economist Jennifer Lee of BMO Capital Markets put it, "Almost all signs are pointing to a weak June jobs report tomorrow."
Financial stocks, by far the most susceptible to global trends, fell the hardest. Dow component JPMorgan Chase (NYSE: JPM ) was down nearly 4% as of this writing, while Bank of America (NYSE: BAC ) lost 2.4%. U.S. banks remain exposed to European swings, and they reportedly hold over $30 billion combined in eurozone markets.
On the bright side, stocks affected by the manufacturing sector continued to perform well today. On Tuesday, the U.S. Department of Commerce reported that factory orders increased in May, easing concerns from earlier reports that global trends threatened the manufacturing sector. Alcoa (NYSE: AA ) and Home Depot (NYSE: HD ) reaped the benefits. Alcoa shares were up 1.4% despite analysts projecting a weak earnings report next week, so its gains might be short-lived. Home Depot's positive day could be more permanent, though. The home improvements store added the Whirlpool, Electrolux, and Frigidaire brands as part of an ongoing effort to attract more consumers.
Big trends steered the Dow today, but earnings reports start next week, and it will be important to stay in the know. Use the My Watchlist feature below to get up-to-date news and analysis on all of these stocks and more. To get started, click on any company below:
- Add JPMorgan Chase to My Watchlist.
- Add Home Depot to My Watchlist.
- Add Bank of America Corporation to My Watchlist.
- Add Alcoa to My Watchlist.