The Cause of Today's 111-Point Dow Drop

This has been a great year so far for Wall Street: The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is already up more than 11% in a year characterized by record-setting highs and massive corporate profits. A bullish market is great, but it can be tougher for investors to stomach disappointing news in the middle of such a run-up. Wednesday's payroll figures -- showing private-sector employment that rose by nearly 160,000 jobs in March -- didn't quite live up to Mr. Market's demands.

Throw in some unwelcome news from the Federal Reserve, and you have the makings of a 100-plus-point drop. The Dow ended 111 points, or 0.8%, lower, at 14,550.

Only 10% of Dow stocks advanced today, and Merck (NYSE: MRK  ) ended the day as one of those cherished few. Its 1% rise was good enough for tops in the Dow, as investors flocked to the stock's 3.9% dividend. The market may be cheering encouraging new research from the company, making inroads on a sleep drug that doesn't inhibit patient memory or attention, two common areas that today's sleep aids affect. 

Despite paying a 4.1% dividend of its own, Intel (NASDAQ: INTC  ) , regrettably, lacks any promising leads for new life-changing products of its own. Heck, it can barely keep up with its competitors. The stock, down 25% in the past year, fell 1.9% today, after the departing CEO's 2012 remuneration came in at around $19 million. The 10% pay raise came the same year EPS slipped 10%.

But Wednesday's biggest blue-chip decliners were financials: JPMorgan Chase (NYSE: JPM  ) and Bank of America (NYSE: BAC  ) slumped 3% and 2.8%, respectively, on concerns about the private sector's robustness. Perhaps a larger issue concerning the big banks today is the longevity of the Fed's bond-buying program, intended to stabilize a recovering U.S. economy. A top Fed official told an audience today that the central bank may need to ease up on the bond purchases later in the year as the economy strengthens.

Bank of America's stock doubled in 2012 -- but is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.


Read/Post Comments (0) | Recommend This Article (21)

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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2345296, ~/Articles/ArticleHandler.aspx, 12/20/2014 2:25:28 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