The Dow's Labor Day Hangover

Perhaps market bulls made Labor Day a four-day weekend, as stocks are trading definitively lower today. Incredibly disappointing manufacturing data showing further contraction is weighing on the markets, and it's likely the talk of politicians congregating in Charlotte for the Democratic Convention this week. If the economy continues to show weakness into the fall, expect a very tight presidential election.

The Dow Jones Industrial Average (INDEX: ^DJI  ) , for better or worse the markets proxy, is rendering judgments on current events. The index is currently only down 0.5%, making it the worst performer of the three major indexes. Its components are having a decidedly negative day, with more than two-thirds of the index seeing losses. Unsurprisingly, the big decliners feature industrials DuPont (NYSE: DD  ) , down 1.9%, and Caterpillar (NYSE: CAT  ) , which has plunged 3.1% as a stagnant economy casts doubt over the short-term prospects of these bellwethers.

In one bit of good news, auto sales beat expectations and increased the annual run-rate to 14.5 million units. Shares of Ford (NYSE: F  ) are up 0.7%, while its Japanese competitors, Toyota (NYSE: TM  ) and Honda, are both down more than 1%. Toyota and Honda are showing tremendous comps since Thailand's natural disaster and supply disruption fouled the year-ago numbers. So despite their respective 46% and 89% gains topping the blue oval's 13%, they still trail Ford's August sales of 197,249. Tesla is off 1.5%, which is a bit surprising; not only is an increase in car-buying good for the upstart auto-maker, but higher fuel prices have consumers thinking green and shopping for more efficient vehicles.

Tesla is now trading near where it started the year, despite a run-up approaching $40 per share. If you believe in the long-term story, than contractions like today's could reward the long -term investor. However, there is more than one approach to building wealth and retiring well. In our free report "3 Stocks That Will Help You Retire Rich," we reveal some stocks that could help you, as well as some winning, wealth-building strategies. Click here to keep reading.

David Williamson owns shares of Ford Motor, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Ford Motor and Tesla Motors. Motley Fool newsletter services have recommended buying shares of Tesla Motors and Ford Motor. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. 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 September 04, 2012, at 3:25 PM, funfundvierzig wrote:

    In the peculiar case of DuPont, this much shrunken chemical conglomerate only last week dumped its DuPont Performance Coatings unit, lopping of over 10% of DuPont's top-line, or over $4 billion in yearly revenues along with a major contribution to the Company's top-heavy overhead.

    In addition, on Aug. 1 a federal jury found DuPont had deliberately and willfully stolen and used the superior patented seed technology of rival Monsanto. The case also revealed the massive failure by DuPont Management to develop and commercialise a first-generation GM seed trait (DuPont OptimumGAT) and an organised effort to cover-up this failure. The jury awarded Monsanto $1 billion, which may be increased because the acts of DuPont were willful and egregious. ...funfun..

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