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Earnings Pessimism Sinks Dow

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Earnings season got off to a shaky start today, as the Dow Jones Industrial Average (INDEX: ^DJI  ) slid nearly 1%, or 128 points, on nervousness stemming from a negative report from Alcoa (NYSE: AA  ) and a warning from Chevron (NYSE: CVX  ) .

Alcoa actually beat earnings and revenue estimates but scaled back its outlook for growth in global aluminum demand for 2012 from 7% to 6%, which spooked investors. Shares fell 4.6% despite CEO Klaus Kleinfeld highlighting the company's achieving "record profitability in midstream and downstream businesses." The manufacturer also got dinged by a 17% drop in year-over-year aluminum prices.

Chevron, meanwhile, warned that its third-quarter earnings would be substantially lower than last quarter's due to lower oil prices and less production, as well as currency exchange losses. Financial results were also hurt by a refinery fire in Richmond, Calif., and Hurricane Isaac in the Gulf of Mexico. Shares dropped 4.2% as a result. Analysts are expecting earnings of $3.06 when the oil major reports on Nov. 2.

While nearly every Dow component followed those two into the red, there were two big winners on the day.

Shares of Wal-Mart (NYSE: WMT  ) jumped 1.7% after unveiling a plan at an investor conference to boost sales through accelerating small store growth, focusing on e-commerce, and offering lower prices. The retail giant said it plans to add the same amount of floor space in fiscal 2014 as fiscal 2013 and said sales should increase between 5% and 7% in fiscal 2014. Wal-Mart also touted the success of its Neighborhood Market stores, a small-store format that's focused on groceries, and plans to more than double the number of those locations by 2016.

JPMorgan Chase (NYSE: JPM  ) was the other big gainer as its shares climbed nearly 1%, with investors apparently reassured by public remarks CEO Jamie Dimon made. Speaking at the Council on Foreign Relations, Dimon lashed out at Washington's ineptitude on issues such as the fiscal cliff and a recent lawsuit against his bank. Dimon said his firm had assembled a "war room" to prepare for the fiscal cliff and criticized lawmakers for forcing him to do so, saying, "I just think it's terrible policy to let us get this close." Finally, he again commented on this spring's multibillion-dollar trading loss, calling it a "stupid error." JPMorgan reports earnings on Friday; analysts are expecting an EPS of $1.21 a share.

Looking ahead to tomorrow, investors will want to keep an eye out for the initial claims to see if strong jobs growth has continued.

JPMorgan may have moved up on Dimon's comments, but according to our top banking analyst there's only one Wall Street bank that's truly safe and it's not JPMorgan Chase. Find out which one in the Fool's special free report: "The Only Big Bank Built to Last." You can get your free copy now by clicking right here.

Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool owns shares of JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Chevron. We Fools don't 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. The Motley Fool has a disclosure policy.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

Today's Market

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DOW 17,706.05 213.12 1.22%
S&P 500 2,076.06 28.02 1.37%
NASD 4,861.06 95.27 2.00%

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Related Tickers

5/24/2016 4:32 PM
^DJI $17706.05 Up +213.12 +1.22%
AA $9.42 Up +0.14 +1.51%
Alcoa, Inc. CAPS Rating: ****
CVX $100.19 Up +0.81 +0.82%
Chevron CAPS Rating: ****
JPM $64.54 Up +1.08 +1.70%
JPMorgan Chase & C… CAPS Rating: ****
WMT $70.24 Up +0.74 +1.06%
Wal-Mart Stores CAPS Rating: ***