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Why the Dow's Headed Down Again This Morning

Yesterday, the stock market came back from a big morning plunge, raising hopes that the worst might be over for the recent Europe-induced downward move. But even though some positive news from the Chinese manufacturing industry gave investors a bit of hope, stocks again turned lower, with most analysts blaming European concerns for the drop. At 10:45 a.m. EDT, the Dow Jones Industrials (INDEX: ^DJI  ) were down 82 points to 12,639.

Leading the Dow down was Cisco Systems (Nasdaq: CSCO  ) , which fell more than 4%. Analysts are pointing to VMware's (NYSE: VMW  ) buyout bid for privately held virtualization software specialist Nicira as the driver for Cisco's woes, as the move makes VMware an even bigger competitor in Cisco's networking space.

On the plus side was Caterpillar (NYSE: CAT  ) , up almost 1% in anticipation of its earnings report tomorrow. The jump is likely in response to China's positive manufacturing data, as its purchasing managers' index rose to a five-month high. The stock has already plunged from its recent highs, so results that are any better than terrible could lead to a bounce.

Finally, Wal-Mart (NYSE: WMT  ) was down slightly. The retail giant joined many merchants to speak out against the proposed settlement with credit card networks Visa and MasterCard over processing fees. Wal-Mart argues that the settlement does nothing to rein in processing fees over the long haul and that what's needed is a more thorough restructuring of the relationship between card networks and merchants. With its huge revenue, card-based fees are a big expense for Wal-Mart, and anything it can do to improve its bargaining position could improve the bottom line.

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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 MasterCard and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Visa and VMware, as well as creating a bull call spread position on Wal-Mart. 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.

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  • Report this Comment On July 24, 2012, at 1:47 PM, gfbjohn wrote:

    If WMT is such a ridiculously big tail as to wag the supply dog, surely it can start its own card and be done with it. So many people spend so much of their money at WMT. WMT and its ubiquitous presence and control makes me cringe, but I can't argue with their success. The WMT card would just be another nail in the coffin.

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Related Tickers

10/21/2016 4:47 PM
^DJI $18145.71 Down -16.64 -0.09%
CAT $86.33 Down -0.30 -0.35%
Caterpillar CAPS Rating: ***
CSCO $30.15 Down -0.01 -0.03%
Cisco Systems CAPS Rating: ****
VMW $72.91 Down -0.35 -0.48%
VMware CAPS Rating: ***
WMT $68.34 Down -0.39 -0.57%
Wal-Mart Stores CAPS Rating: ***