It shouldn't be a surprise to anyone that the Dow Jones Industrial Average (^DJI 0.33%) is down in intraday trading. Following an explosive week in which the index gained more than 300 points, it's taking a well-deserved breather. As I write, 23 out of Dow's 30 components are in the red, leaving only seven that are up for the day. The overall index is depressed by nearly 50 points.

What's weighing down the Dow?
The biggest news weighing on the markets was a report from the Federal Reserve Bank of New York that its Empire State Index, which tracks manufacturing activity in the eponymous region, had decreased to a negative 10.4 for the month of September. As you can see in the chart below, which doesn't include today's release, this will be the lowest point for the index since November of 2010. 

Empire State Manufacturing General Business Conditions Index data by YCharts.

Although the Empire State Index incorporates only regional data, it's a closely watched metric because it provides the month's first clue about the health of the nation's manufacturing sector. The negative reading was particularly surprising because economists had expected the index to improve. According to an economist interviewed by MarketWatch.com, "The report ... doesn't offer much hope that the poor conditions in the [factory] sector will abate anytime soon."

The day's winners and losers
The inglorious distinction of being the Dow's worst-performing stock thus far in intraday trading goes to Bank of America (BAC 1.16%), the nation's second-largest bank by assets. To those of you that follow B of A, this probably doesn't come as much of a surprise, as it is one of the most volatile stocks in the market.

On a more fundamental level, however, it's likely that traders are seeing the error of their decision to bid up the bank's price following last week's news that the Fed will unleash a third round of quantitative easing to further depress long-term interest rates. While the announcement was unquestionably a boon to equities, its impact on banks will be less positive, as lenders rely on the spread between short- and long-term interest rates to make money. Just since the beginning of 2011, for example, B of A has seen its quarterly net interest income shrink by more than $2 billion.

As my colleague Anand Chokkavelu noted earlier, shares in JPMorgan Chase (JPM 0.70%) as well as other financials, are likely down for the same reason.

On the opposite end of the spectrum is the dividend stalwart AT&T (T 0.52%), joined in the green by both McDonald's (MCD 0.21%) and Coca-Cola, all of which are up more than 50 basis points. Quite simply, in the absence of a specific impetus, it appears that companies like these are paradoxically benefiting from the market's pullback as investors choose to stash their cash in some of the biggest and best-diversified companies the market has to offer. This is one of the reasons, in fact, that Coca-Cola is included in our recent free report about three stocks every dividend investor needs.

Foolish bottom line
After last week's rally, the big question on traders' minds is whether or not today's downbeat performance is merely a harbinger of worse things to come. Indeed, given the otherwise dismal state of the economy, it's hard to argue with the notion that equities may have outpaced the fundamentals.

With this in mind, it's important for investors to limit themselves to stocks that are trading at huge discounts to their historical valuations. One such stock is Bank of America, which trades for half of book value. To see why our in-house banking analyst Anand Chokkavelu concluded that Bank of America could "double or triple within the next five years," simply click here now.