The Dow: Still Down After 5 Years

Exactly five years ago today, American equity markets hit their all-time highs. Among other indicators, the Dow Jones Industrial Average (INDEX: ^DJI  ) traded at about 14,000 and the S&P 500 (INDEX: ^GSPC  ) stood above 1,550. To investors and anyone in the financial industry, it seems a lifetime ago, as both the market and the economy continue to suffer the aftershocks of the 2008 and 2009 financial cataclysm.

The performance of the market today is further evidence that we remain mired in past mistakes. Following the release of a gloomy report, the Dow is currently down by 85 points, or 0.63%.

Why the Dow's down
Earlier today, the International Monetary Fund released its quarterly World Economic Outlook. As I discussed this morning, the report warns that risks for a serious global slowdown are "alarmingly high," that "confidence in the global financial system remains exceptionally fragile," and that "bank lending has remained sluggish across advanced economies." The report's authors see the 17-country euro area contracting by 0.4% and both the U.S. and Japanese economies expanding by 2.2%.

The IMF report is unwelcome news, given similar concerns about the state of the Asian economies. In an analogous report published yesterday, the World Bank decreased its estimates for economic growth in Asia and the Pacific region from 8.2% in 2011 to 7.2% this year. With respect to China specifically, weak exports and lower investment levels are expected to decrease the country's output growth to 7.7% this year, down from 9.3% in 2011.

Added to these concerns are questions about the upcoming corporate earnings season, which is set to kick off today when economic bellwether Alcoa (NYSE: AA  ) reports third-quarter earnings after the closing bell. According to The Wall Street Journal's Market Data Center, analysts expect the company to break even this year. If so, the performance will be a far cry from the third quarter last year, in which the aluminum giant recorded a profit of $0.15 a share.

Among other stocks trading lower today are Intel (Nasdaq: INTC  ) and Hewlett-Packard (NYSE: HPQ  ) . As my colleague Matt Thalman noted earlier, both companies were the unwitting recipients of analyst downgrades. Stanford Bernstein tagged Intel with an "underperform" rating, and Citigroup reduced HP to "sell." Shares in the companies are lower by 2.6% and 0.7%, respectively.

The future of Intel
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key details on the chip giant. Better yet, you'll continue to receive updates as news develops for an entire year. Click here now to learn more.

Foolish contributor John Maxfield does not have a financial stake in any of the companies mentioned above. The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Intel. Motley Fool newsletter services have recommended writing puts on Intel. 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.

Read/Post Comments (0) | Recommend This Article (4)

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: 2050198, ~/Articles/ArticleHandler.aspx, 10/26/2016 5:31:10 PM

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 Moments ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

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 4:39 PM
^DJI $18199.33 Up +30.06 +0.17%
^GSPC $2139.43 Down -3.73 -0.17%
S&P 500 INDEX CAPS Rating: No stars
AA $27.79 Up +0.50 +1.83%
Alcoa CAPS Rating: ***
HPQ $13.91 Up +0.01 +0.07%
HP CAPS Rating: ***
INTC $34.92 Down -0.18 -0.51%
Intel CAPS Rating: ****