Why the Dow's Taking a Breather This Morning

Yesterday's big Dow breakout showed just how much investors have looked forward to central bank intervention. Today, though, everyone seems to be waiting for the other half of the one-two punch, as mixed employment data helped build a case for the Federal Reserve stepping in with another round of quantitative easing. Job gains fell below 100,000, and although the unemployment rate fell to 8.1%, the drop owed largely to a decline in job-seeking among the outstanding labor force. Investors therefore went back to wait-and-see mode, with the Dow Jones Industrials (INDEX: ^DJI  ) up just two points at around 10:50 a.m. EDT.

Yet the apparent calm in the overall average masked some huge moves from individual Dow components. Caterpillar (NYSE: CAT  ) surged more than 4% on news that China approved a big boost in spending on 60 different infrastructure projects. Caterpillar is certainly hoping for its share of roughly $150 billion, which could go a long way toward bringing the equipment giant back from its recent stock slump. Alcoa (NYSE: AA  ) jumped about 2.5% on the same news, with the potential added bonus from reports that one deal for fourth-quarter aluminum shipments to Japan will command an increased premium from third-quarter levels.

On the flip side, Intel (Nasdaq: INTC  ) plunged more than 3% after cutting its revenue forecast for the third quarter. Fool analyst Evan Niu foresaw Intel's move, pointing to weakness in the PC market as the driving factor in the chip giant's challenges.

Finally, Kraft Foods (Nasdaq: KFT  ) fell almost 5%. Last night, the company said that its Mondelez international snack division would likely post lower earnings than many analysts expect due to adverse foreign-exchange rates. With the company planning its long-awaited spinoff of its North American grocery business next month, though, investors are focused on positioning themselves for which part of the company they want to focus on.

Never a dull moment
Averages may stay flat, but there's always something going on with individual companies. Intel's move has implications for the company's long-term future. Find out more about how today's news could affect the semiconductor giant in the Fool's new premium research report on Intel, which includes a year of free updates covering all its future news. Click here now to get started.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Intel. 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 September 07, 2012, at 12:52 PM, garifolle wrote:

    Couldn't it just that yesterday, the markets (as we had been feeling) was eager to boom, and ready to take any news to jump.

    Because what Gragui said was not THAT a big news.

    But yesteray's bubble needed to let some helium out and today there is a lit of profit taking.

    What a somewhat scary is the bullishness of Gold.

  • Report this Comment On September 07, 2012, at 2:26 PM, whyaduck1128 wrote:

    All the yammerers look for a reason for every little blip, belch, twitch, hop, skip, jump, and fart the market makes. They seem unable to grasp the idea that not every event requires a reason. The more significant the percentage of movement, the more likely there IS a reason, but on days like today (my equities are up 0.4%), it could just be noise.

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