A gloomy aura continues to plague the markets today, as a majority of investors wait for positive economic indicators. The Dow Jones Industrial Average (INDEX: ^DJI ) stumbled 0.47% and the S&P 500 (INDEX: ^GSPC ) lost 0.39% as earnings season dawns. Stale news from the end of last week and speculation fueled the majority of the losses.
One large storyline today is that the federal and state governments overpaid on unemployment compensation by $14 billion in 2011. Obviously, this did little to cheer investors in the face of already massive deficits, but governments are scrambling to reclaim some of the money. A silver lining: Fewer people than originally reported needed the benefits.
These next few weeks of earnings season should supply more substantive signs of how companies are faring. Investors also are looking to see if the Fed indicates action in its Wednesday meeting. Elsewhere, Europe continued to dominate headlines. Spanish yields again topped 7%.
The big movers
Alcoa (NYSE: AA ) , the first big name to report earnings, will announce after market close what most analysts expect to be a dreadful second quarter. Shares dropped nearly 1.5% this morning on low expectations. Alcoa reported $0.10 in earnings per share in for the first quarter, about a third of the previous year's figure. The global aluminum production surplus, now continuing for eight years straight, threatens the company's margins.
The Alcoa expectations seem to be hurting DuPont (NYSE: DD ) as well. Many investors worry that Alcoa will reflect the broader manufacturing direction, and that would mean bad news for DuPont given its exposure to that industry. Otherwise, the company released little in notable headlines. Reports that DuPont's acquisition of Arkema is not imminent did discourage investors who thought the move would benefit the company, and its subsidiary Butamax's ongoing lawsuit over patent infringement could be worrisome to investors as well, despite Butamax being the plaintiff.
Finally, the Dow's heaviest-weighted component, IBM (Nasdaq: IBM ) , lost 1.37% this morning. The company fell primarily due to the broader economic scene, which again solidifies the importance of analyzing a company over a longer time frame. Look for IBM to bounce back in the long run as a quality company with a powerful business model.
That's it for the morning roundup. Earnings reports will continue to affect both individual companies and the markets as a whole. Make sure to check back and stay posted on all the latest news on your favorite companies. Add these companies to your free My Watchlist feature to receive up-to-date analysis whenever news breaks. To get started, click on any company below:
More Expert Advice from The Motley Fool
Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Representing 14.7% of 2011 global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160B by 2017. Based on this prospective and several other company-specific factors, Alcoa is certainly worth a closer look
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