Why the Dow Fell Today

Markets were down across the board today, as a bizarre, premature earnings release by Google (Nasdaq: GOOG  ) highlighted the day's events. The Dow Jones Industrial Index (INDEX: ^DJI  ) fell eight points, to close at 13,548.

Needless to say, Google's results disappointed investors, and the stock immediately fell off a cliff, prompting trading to be halted for a number of hours before finally resuming. Google ended up losing 8% on the day.

The latest figures released on China showed growth slowing for a seventh consecutive quarter. Although it's the slowest annual growth rate in three years, the 7.4% uptick was consistent with expectations. The figures come on the heels of data released Monday showing that inflation in the world's second-largest economy fell to 1.9% in September, which could be a sign that government policies are beginning to work.

The Labor Department also released data on Thursday, reporting that the four week average for initial unemployment claims rose slightly -- by just 750 claims -- to 365,500. In short, although there was no definitively negative macroeconomic news, the Dow still fell, even as 60% of its components actually advanced.

A major reason for the decline was International Business Machines' (NYSE: IBM  ) 2.8% tumble. Of the Dow's 30 components, IBM is the most heavily weighted, comprising more than 11% of the index. The company continued to reel from its disappointing quarterly report, which revealed that revenues dropped by 5%.

But the biggest laggard in the Dow was American Express (NYSE: AXP  ) , which fell nearly 3%, after its quarterly report showed decelerating growth. A stale 4% increase in sales, a 92% spike in provisions for losses, on top of cautions about a slowdown in consumer spending, combined to disappoint investors.

The index's standout performer on Thursday was Travelers (NYSE: TRV  ) , which rose more than 3.5%, to close at an all-time high. EPS in the quarter more than doubled from last year's number, as earnings came in at $2.22 per share. The insurance company was able to retain customers despite some recently instituted price hikes, helping it to beat estimates.

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John Divine has no positions in the stocks mentioned above. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool owns shares of Google and International Business Machines and has the following options: short OCT 2012 $55.00 puts on American Express Company, short OCT 2012 $60.00 calls on American Express Company, and long OCT 2012 $65.00 calls on American Express Company. Motley Fool newsletter services recommend American Express Company and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.


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