1 Big Reason the Dow Is Falling

The Dow Jones Industrial Average (INDEX: ^DJI  ) was down about 0.5% by midday following news that Japan's GDP growth was unexpectedly lower for the second quarter. GDP growth rang in at 1.4%, shy of the 2.3% expectation, and far lower than the 5.5% seen in the first quarter.

Japan is citing poor consumer spending as the cause for the slowdown, and right now the Dow is the weakest of the three major exchanges. That's expected, given the Dow's hefty consumer goods weighting when compared to indexes like the S&P 500 (INDEX: ^GSPC  ) .

Index	Gain/Loss	Gain/Loss %	Current Value
Dow Jones Industrial Average	(60.1)	(0.49%)	13,147
Nasdaq	(6.3)	(0.21%)	3,014
S&P 500	(4.8)	(0.34%)	1,401

Source: S&P Capital IQ.

Industrials are also dragging the Dow down today. The sector also has about twice the weighting compared to other indexes, and given that much of Japan's recent GDP growth was fueled by reconstruction, it's easy to see why industrial heavies Alcoa (NYSE: AA  ) and Caterpillar (NYSE: CAT  ) that are among the biggest losers today. The two components are down 1.9% and 0.9%, respectively.

Asia is a key growth market for Caterpillar going forward. The region is already the company's second-largest by revenue and has consistently outpaced the growth of their other segments. Filling a void created by the spending decrease from Japan isn't easy, but in Caterpillar's case there may be a silver lining.

Japan is also experiencing a rapidly rising currency. The yen is trading near all-time highs compared to the U.S. dollar and the euro, which could make Caterpillar more competitive with Komatsu, the Japanese construction equipment manufacturer and most legitimate competitor to Caterpillar in China.

The rising yen could be equally beneficial for the domestic auto manufacturers Ford (NYSE: F  ) and General Motors. As Toyota and General Motors trade market share in their efforts to become the No. 1 automaker, it will be harder for Toyota to undercut General Motors on price and remain financially stable. Also, as both Ford and General Motors eye China as the next big auto market, a strong yen will allow them to be more competitive against both Toyota and Honda.

You shouldn't make the decision to invest in Ford or Caterpillar on this news alone, though.

There are much larger considerations for both investments. Our top analysts will tell you exactly what you need to know about both companies, and whether you should buy or sell them today, in our premium Ford and Caterpillar reports. Click here to read whether Ford will crash your portfolio, and click here to read about Caterpillar's three biggest catalysts.