Why the Dow Plunged Today

Markets were down across the board Friday, with the Dow Jones Industrial Average (INDEX: ^DJI  ) mimicking its prodigious rise yesterday with an equally steep fall today. The index quickly erased its nascent November gains, closing down 139 points, a decline of more than 1%, to close at 13,093. 

The biggest catalyst of the day came from the release of October jobs data. The economy added 171,000 non-farm jobs in the month, far higher than the 125,000 figure that economists had been expecting. Ironically, the good news may have caused the markets to flounder; the news may help the Obama campaign in the president's effort to beat Republican opponent Mitt Romney. Investors may fear that Obama will have a tougher time working with a Republican House of Representatives to avoid America's looming fiscal cliff in the coming months. 

Bank of America (NYSE: BAC  ) was one of just four Dow stocks to advance amid the gloom of the day, and was the only one of the 30 components to gain more than 1% today. The stock continued its remarkable rally; it's up 75% year to date. Investors may finally be confident in the bank's capital levels, which were the source of much concern in 2011. 

Chevron (NYSE: CVX  ) was the poorest performer in the index today, falling almost 3%, as investors reacted to weak quarterly results from the oil company. Not only did revenues and profits fall from a year ago, but the price of oil continued to fall, declining 2.6% Friday to close at $84.86 per barrel.

Caterpillar (NYSE: CAT  ) was the second biggest decliner in the Dow, falling more than 2% on news that U.S. equipment sales were stalling in September. Sales of non-defense capital goods, excluding aircraft -- a metric that's considered a good measurement of business' willingness to invest -- rose just 0.2% in September. 

Outside the Dow, we saw quite a bit of movement today from biotech Dendreon (Nasdaq: DNDN  ) , which locked in gains of more than 16% for the day, after briefly trading more than 30% higher earlier on. Driving today's outperformance were third quarter results, where Dendreon reported a nearly 30% jump in sales for its prostate cancer treatment drug, and announced it expects to save $150 million annually from restructuring efforts.

Although the market fell today, Bank of America shares advanced, yet again. To learn more about the most-talked-about bank out there, check out our in-depth premium company report on Bank of America. Not only does the report detail Bank of America's prospects, including three reasons to buy and three reasons to sell the stock, but it comes with a full year of updates. Just click here to get instant access today.

John Divine owns $10.00 January 2013 call options on BAC stock. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool owns shares of Bank of America and Dendreon. Motley Fool newsletter services recommend Chevron. 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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