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Mixed Economic Data Puts the Brakes on the Dow

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After six consecutive winning days for the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , it appears the index may break that streak today because of the disappointing housing numbers released this morning. The number of pending home sales fell by 4.3% from November to December, whereas analysts were expecting a gain of 1%. On the other hand data on durable-goods orders looks rather encouraging. From November to December most economists had forecast a 2% advance in the orders for goods that will last three years or longer, but that number actually came in at 4.6%.

The mixed economic data seems to have investors confused, as the three major indexes can't agree which way to go. As of 12:40 p.m. EST the Dow is down 0.08%. The S&P 500 is down 0.13%, while the NASDAQ is up 0.21%.

Who's down on the Dow?
Shares of do-it-yourself home improvement store Home Depot (NYSE: HD  ) are down 0.6% today. The negative housing numbers are likely the cause for the drop. Home Depot is strongly tied to the housing market and especially existing-home sales. When people move into previously occupied homes, they often replace fixtures, wall colors, and other small items, all of which can be purchased at Home Depot.

Although there was a rise in durable goods from November to December, a number of Dow components that would have likely benefited from these higher sales numbers are slipping today. Shares of Boeing are down nearly 1%, while Alcoa has lost 1.3% and DuPont is down 0.7%. The reason may be that although durable-goods orders increased more than expected in the most recent reading, investors haven't seen these positive readings translate to higher revenues or profits for any of the three companies yet.

More foolish insight
Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Representing 14.7% of 2011 global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant, simply click here to get started.

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Matt Thalman

Matt primarily covers the Dow Components, the Major Indexes daily moves, Consumer Goods stocks, and General Investing Topics.

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11/27/2015 1:00 PM
HD $134.74 Up +0.09 +0.07%
Home Depot CAPS Rating: ****