The Dow Jones Industrial Average (INDEX: ^DJI) dropped 0.81%, or 110 points, today, while the S&P 500 (INDEX: ^GSPC) moved lower by 14 points, or 0.99%. Five years after these two indexes hit all-time highs, it's looking like it may be a bit longer until they reach the levels last seen in October 2008.
Earlier today, my colleague John Maxfield explained that the Dow dropped today because "the International Monetary Fund released its quarterly World Economic Report in which it warns that risks for a serious global slowdown are 'alarmingly high' and that 'confidence in the global financial system remains exceptionally fragile.'" John went further, saying that after the World Bank's report yesterday cutting the growth rates in Asia-Pacific countries, today's report only solidifies fears that the world economy is clearly slowing.
These new fears and a number of downgrades had 27 of the 30 Dow components trading lower today. The only three companies in the green were (drum roll, please) Alcoa (NYSE: AA), McDonald's (NYSE: MCD), and Boeing (NYSE: BA).
Why these lucky three?
Alcoa moved up and down today, but it was in the green for the vast majority of the trading session and closed up 0.11%, or $0.01. The company ended its legal troubles with Aluminum Bahrain BSC today. In the settlement agreement, Alcoa will pay $85 million and establish a long-term sales agreement with Bahrain.
Alcoa also announced quarterly earnings minutes after the closing bell today. The company beat analyst estimates that it would just break even, by reporting a profit of $0.03 per share when excluding special items. The company showed revenue of $5.8 billion in the third quarter, which was again above estimates of $5.54 billion, but 9% lower than the same period last year. Management contributed year-over-year reductions to a 17% to 20% decline in aluminum prices.
McDonald's closed the trading day higher by 0.62% on relatively no news to speak of. Investors rolling out of Yum! Brands (NYSE: YUM) before its earnings release could have been buying McDonald's on fears that Yum! may disappoint after the bell. As the markets closed, Yum! was down by 1.34%. But Yum!'s earnings report beat the analysts on the bottom line, with earnings per share of $0.99 compared with $0.97. The company increased worldwide operating profit by 18%, while China alone increased by 22%. Same-store sales also grew 6% in China, with the company adding 192 new units in the country. Yum!'s success in China is great news for McDonald's investors. Both brands are higher in after-hours trading, by 0.16% and 4.12%.
Finally, Boeing saw its stock lift higher by 0.10% as of the closing bell. The rise can be contributed to slow merger negotiations between EADS and BAE Systems (LSE: BAE). Only a few weeks ago, Boeing's closest competitor, Airbus, was in line to become part of the world's largest defense and space company when its parent company, EADS, announced merger talks with BAE. Talks have moved slowly since then, not only because the companies disagree on terms, but also because some European governments are voicing their opinions into the matter.
Lastly, we're now hearing from shareholders raising concerns over the merger,as The Wall Street Journal reported that the largest BAE shareholder has "significant reservations" relating to the deal. All the delays are good signs to Boeing shareholders, who would prefer to not see the deal go through.
