Why The Dow Dropped for the Sixth Straight Day

The hits just keep on coming for the Dow Jones Industrial Average (INDEX: ^DJI  ) , which dropped for the sixth straight day today, shedding a quarter of a percentage point. The Dow actually managed to claw its way back from much bigger losses this morning to sneak into positive territory before sinking into the red, once again.

Macroeconomic worries co ntinued to weigh on markets today, with even Warren Buffett sounding less optimistic about the U.S. economy. Buffett said that the general economy has been flat, and that the "little pickup in housing has not been enough to offset what has been going on in the rest of the world."

Here’s how all three major U.S. indices fared on the day:
 

Index

Change

Ending Value

Dow Jones Industrial Average -31.26 [-0.25%] 12,573.27
Nasdaq -21.79 [-0.75%] 2,866.19
S&P 500 -6.69 [-0.50%] 1,334.76


Worries over upcoming earnings were probably the main reason for the Dow’s slide today. Investors were most concerned with tech companies, after a slew of subpar earnings releases from smaller software firms, and a warning from AMD on its second quarter revenue. The chip maker said sales would be significantly lower than previously forecast, based on weakness in China and Europe. That was enough to make three big tech companies the Dow’s biggest losers. Intel (Nasdaq: INTC  ) led the fall, dropping 2.6%, while Cisco (Nasdaq: CSCO  ) and Microsoft (Nasdaq: MSFT  ) dropped 2.4% and 2.3%, respectively. Intel kicks off earnings for these companies on July 17th.

On the other side of the coin, giant drug maker Merck (NYSE: MRK  ) soared 4.1% on the day. Outside monitors recommended that it halt the study of its osteoporosis drug, because data had already successfully shown its promise in reducing fractures. That’s great news for Merck, which will see sales of its asthma drug Singulair plummet when it loses patent protection next month, and cheaper generic drugs are allowed to be released.

Taking a step back, with all the uncertainty surrounding Europe and the global economy, many investors may be tempted to take their money and run far from the market. But that can be one of the biggest mistakes investors can make. Some of the most successful stock picks are great dividend stocks purchased at attractive valuations on dips in the market. With that in mind, we've taken an in-depth look at all 30 Dow components and picked out our three favorite Dow dividend stocks that investors can buy right now. You can find the names and analysis of these companies in our brand-new free report, "The 3 Dow Stocks Dividend Investors Need." Read the report now -- it's absolutely free

Brendan Byrnes owns no shares of any company mentioned above. The Motley Fool owns shares of Intel, Cisco Systems, and Microsoft. Motley Fool newsletter services have recommended buying shares of Intel and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. 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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  • Report this Comment On July 12, 2012, at 11:44 PM, ozzie wrote:

    Well said! I thought sure you might blame the Fed or Europe, but I like your analysis. Thanks!

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