Why the Dow Cratered 225 Points Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) posted a second straight day of triple-digit losses Thursday, as a combination of weak earnings, rising interest rates, and chaos in Egypt sent stocks spiraling downward. While that trifecta may sound like a sure-fire reason for a sell-off, all is not lost: A seemingly major sell-off like today's still leaves the Dow up more than 17% year to date, and jobless claims last week fell to the lowest number since 2007. The Dow tumbled 225 points, or 1.5%, to end at 15,112 Thursday. 

Caterpillar (NYSE: CAT  ) was the only stock in the index ending in the green, ticking up 0.1%. With the recent results from rival Deere being applauded by the markets today, Caterpillar benefited from its presence in the same industry. With Deere's farm machinery sales jumping 60% between 2009 and 2012, Wall Street figured now might be the time to invest in machinery makers. 

Wal-Mart (NYSE: WMT  ) , however, lost 2.6% as the retailer's second-quarter results underwhelmed. Not only did sales disappoint, but the company also lowered its expectations for this fiscal year, as several other major retailers missed investor's expectations. Wal-Mart, of course, faces increasing price competition from online retailers, as well, threatening its future margins. 

Hewlett-Packard (NYSE: HPQ  ) dropped 4.5% Thursday, as tech stocks were the worst performers of the day, falling more than 1.8% as a group. Some of the worst news for HP investors today didn't even come from the company itself: Dell's profits dropped 70% last quarter, an ominous sign for fellow PC makers. 

Cisco Systems (NASDAQ: CSCO  ) , incidentally, didn't help the tech sector, either, plummeting 7.2% after a discouraging earnings call in which the communications giant announced it would be trimming 5% of its workforce. Despite the slowly recovering economy, CEO John Chambers called the environment more "mixed and inconsistent" than any prior recovery he's ever seen. While the cautious tone dismayed some investors, it's important to remember that Cisco's earnings are still growing nearly 20% a year -- for the time being.

While the Dow is a good place to find well-established companies growing reliably, you may be tired of watching your stocks creep up year after year at a glacial pace. Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.


Read/Post Comments (1) | Recommend This Article (11)

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.

  • Report this Comment On August 15, 2013, at 8:02 PM, GhostdogWarrior wrote:

    Yep Egypt.. that was it.. That just happened today.. No one saw that over the last 6 months... Perhaps the bond market sticking it to everyone has a teeny weeeny bit to do with it..

    Remember High interest rates mean a stong economy.. LOL

Add your comment.

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: 2597966, ~/Articles/ArticleHandler.aspx, 11/24/2014 10:28:53 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