Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Capital Goods Drag Down the Dow

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Capital-goods manufacturers were among the worst performers Tuesday, on a day that saw the Dow Jones Industrial Average down 0.8% after the International Monetary Fund revised its global economic growth projections downward. Manufacturers of building supplies and equipment traded strongly downward in Tuesday's session, reversing the year's upward momentum stemming from increased confidence over a housing recovery.

Building-materials supplier Owens Corning (NYSE: OC  ) lowered its earnings guidance significantly on Tuesday, from the $360 million to $420 million it anticipated in August to a range of only $280 million to $360 million. The company blamed low volumes of roofing products in the U.S. as well as weak demand for its composite materials, used in several industries. Shares fell more than 8%, and investors took Owens Corning's announcement as bad news for the entire industry, as other building-materials suppliers were also down sharply. Gypsum and drywall manufacturer USG (NYSE: USG  ) was particularly hard-hit, down 5.8%.

Homebuilders also pulled back Tuesday, with most down slightly after a strong yearlong rally. Lennar (NYSE: LEN  ) , the nation's largest homebuilder by market capitalization, was down 2% in Tuesday's trading. The company remains near a post-recession high, however, having gained nearly 90% for the year.

Construction-equipment manufacturer Terex (NYSE: TEX  ) was down nearly 4% on Tuesday, as investors reacted not only to Owens Corning's dour estimates but also to an analyst downgrade. JPMorgan Chase analysts cut Terex from "overweight" to "neutral," following a slew of similar downgrades in July. Terex makes heavy machinery for the construction business as well as for the mining, transportation, and energy industries.

Elsewhere in the industrials sector, automotive-component manufacturer BorgWarner (NYSE: BWA  ) slipped 4.3% after CEO Tim Mangenello delivered a similarly dour outlook on global demand in a televised interview Tuesday. "The economic mood of not just the country but globally has gotten a little bit more conservative and a little bit more nervous," he said on Bloomberg TV. Preparing for faltering demand for automobiles in Europe, Mangenello pointed out that about a quarter of BorgWarner's European workforce is temporary. Mangenello also warned that the company was prepared to cut U.S. jobs "if we have to," referring to the upcoming "fiscal cliff" of tax hikes and spending cuts that will occur if Congress doesn't act. Mangenello claimed that while politicians fail to take action, "people are sitting on cash" instead of investing.

Congress may be waiting to take its cue from the presidential election in November, as the two candidates have drastically different ideas for balancing the budget and averting the fiscal cliff. President Obama and Governor Romney both have plans for reducing the deficit and growing the economy, and individual investors can profit from these plans if they have a strategy in place. The Motley Fool has put together a special report detailing four stocks to buy before the election. This report is free, but with the election only a few weeks ago, you should act fast and click here to get your copy now.

Fool contributor Daniel Ferry has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend BorgWarner. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2050598, ~/Articles/ArticleHandler.aspx, 10/27/2016 9:06:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,199.33 30.06 0.00%
S&P 500 2,139.43 -3.73 0.00%
NASD 5,250.27 -33.13 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:04 PM
BWA $35.39 Up +0.44 +0.00%
BorgWarner CAPS Rating: *****
LEN $41.23 Up +0.02 +0.00%
Lennar CAPS Rating: **
OC $50.05 Up +0.29 +0.00%
Owens Corning CAPS Rating: ***
TEX $23.61 Down -0.01 +0.00%
Terex CAPS Rating: *****
USG $25.99 Up +0.11 +0.00%
USG CAPS Rating: ****