Why the Dow Has Plunged More Than 100 Points

Forget about yesterday's great gains. The markets are embracing the red today, and as of 2:30 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has plunged 102 points, or 0.7%, easily giving up everything it gained yesterday. Most stocks on the blue-chip index are in the red, with several recording significant losses. Today's drop doesn't owe to recent events so much as it owes to what investors are feeling. Let's catch up on why the market's so far in the red.

Investors catch a case of the jitters
The bad news started early as payroll-processing company ADP reported that private-sector hiring dried up last month. The addition of 158,000 jobs added last month was far short of expectations for nearly 200,000 and fell significantly from February's hiring pace. The decline in private-sector hiring isn't likely responsible for all of today's market drop, however. With the record highs the markets have been hitting, cautious investors wary of a pullback are much more likely to react negatively to news such as this -- and thus create opportunities for investors looking for a dip in their favorite stocks.

That caution is evidenced by today's 9%-plus jump in the market's CBOE Volatility Index (VOLATILITYINDICES: ^VIX  ) , or VIX -- the measure of fear in the markets. So long as the markets remain at these highs despite the economy's sluggish growth, expect more volatile days like this from both the Vix and the major indexes.

On the stock front, a few picks are making the most of a bad day. Boeing (NYSE: BA  ) shares are up 0.7% to rank among the few winners on the Dow. Japanese carrier All Nippon Airways is reportedly sending its pilots back into flight simulator training for Boeing's grounded 787 Dreamliner aircraft after Boeing finished more than half of the necessary tests on its new battery fix. The resumption of training is a vote of confidence that the company will have the 787 ready to fly again in the near future -- something investors have been patiently waiting for.

Unfortunately, most stocks aren't gaining ground today. Big banks are leading the charge into the red: Bank of America (NYSE: BAC  ) has lost 3.5%, and JPMorgan (NYSE: JPM  ) is down 2.8%. Bank stocks have done well over the course of the recovery, but today's investor pullback is hitting the financial sector harder than the rest today.

Although there's no news important enough to justify today's drop, it's natural to expect jittery investors to retreat from this sector on negative economic news. Still, over the long term, the recovery should benefit stocks like B of A and JP Morgan: While dips are expected, these two stocks have rewarded investors handsomely recently.

Is B of A a buy?
Bank of America's stock doubled in 2012. 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 Financials bureau chief Matt Koppenheffer lift the veil on the bank's operations, detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Related Tickers

9/28/2016 10:25 AM
^DJI $18236.98 Up +8.68 +0.05%
BA $131.27 Down -0.05 -0.04%
Boeing CAPS Rating: ****
^VIX $13.02 Down -0.08 -0.61%
Volatility S&P 500 CAPS Rating: No stars
BAC $15.26 Down -0.03 -0.20%
Bank of America CAPS Rating: ****
JPM $66.48 Up +0.12 +0.18%
JPMorgan Chase CAPS Rating: ****