Possible Housing Slowdown Causes Some Dow Stocks to Drop

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) began the day the red, because of fears that China's housing industry will soon slow down. The Chinese government announced today that in an attempt to slow the country's housing market before it spins out of control, homeowners looking to purchase a second property will be required to put a larger down payment than before, and to pay higher interest rates. If the location is later sold, profits will be taxed at a higher rate.  

But by the time the closing bell rang at 4 p.m. ET, the red had fled, the bulls were back, and the index closed higher by 38 points. After gaining 0.27% today, the Dow now sits at 14,127, just a few points away from its all-time high. The other major indexes also closed higher this afternoon; the S&P 500 led all indexes after rising by 0.46%, and the NASDAQ advanced higher by 0.39%.

While the markets in general moved higher, some of the blue chips headed the other direction.

The Dow's downers
Shares of Alcoa (NYSE: AA  ) and Caterpillar (NYSE: CAT  ) slid lower by 1.07% and 1.75%, respectively, today. Investors sold off shares of both companies after hearing the negative housing news from China. While Caterpillar builds and sells the machines needed for construction projects, Alcoa helps supply aluminum, a major raw material. When one of the world's largest markets is expected to reduce its demand for both these goods, sales and profits of both companies are likely to take a hit in future quarters.  

Another Dow loser today was United Technologies (NYSE: UTX  ) which saw its shares drop by 1.11% during today's trading session. The company's Pratt & Whitney subsidiary announced that it has uncovered a fraudulent engine parts scheme within another unit of United Technologies. An investigation started in 2011 found that metallurgical testing results had been changed, so parts would look as if they could meet extremely stringent conditions, when actually they couldn't. The engine parts in question are used by Pratt & Whitney's Canadian plants, and The Wall Street Journal reports that the parts don't pose any safety hazard.  

Shares of Hewlett-Packard (NYSE: HPQ  ) also lost 0.79% today. The fall came after market research firm International Data Corp. announced that global PC sales fell by 3.7% in 2012 and are expected to decline another 1.3% in 2013. Fourth-quarter PC sales in 2012 fell by 8.3% year over year. IDC says this is the largest holiday-season decline since its records began.

Although HP is attempting to move into the tablet and possibly the smartphone market, the company is currently still heavily tied to the global PC business and needs that industry to at least maintain sales levels while the company attempts to turn itself around.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2292487, ~/Articles/ArticleHandler.aspx, 7/26/2014 10:06:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement