Dow Jones Today Falls on Cracks in the World Economy

The Dow Jones Industrial Average (DJINDICES: ^DJI  )  was down 58 points, to 16,394, at 1:30 p.m. EST on economic data suggesting that the Chinese economy continues to slow. The S&P 500 (SNPINDEX: ^GSPC  ) was down three points to 1,874.

There were no U.S. economic releases today, while new trade data from China was significantly worse than expected.

Report

Period

Result

Previous

Chinese Exports Year-over-Year Growth

February

10.1%

8.1%

Chinese Imports Year-over-Year Growth

February

-18.1%

10.6%

The unexpected drop in Chinese exports has sent down spot commodity prices across the board today, with copper losing 1.5% and Brent crude down nearly as much. Three-month futures for copper are off nearly 4%. The bad news is also hitting mining shares, with iron-ore giants Vale and Rio Tinto both down more than 2%.

Economists' expectations were for 5% year-over-year export growth, so an 18% decrease is terrible. The drop is being attributed to some combination of weaker exports, fake trade receipts in earlier periods, the Chinese New Year, and a front-loading of shipments in January.

Chinese economic data is politicized.so must be always taken with a grain of salt. The Communist Party has been pushing for 7.5% growth and a doubling in GDP by 2020. Local party members are promoted by their ability to boost local growth, so they have an incentive to make their numbers by any way possible. As such, China watchers generally try and use nonpoliticized data such as total electricity demand. Overall, though, the data suggests the Chinese economy continues to slow while debt growth continues to surge, worrying many that China is experiencing a large credit bubble.

One of the many beneficiaries of China's economic growth is leading the Dow's drop today. Boeing (NYSE: BA  ) is down 2.3% to $125.52 after The Wall Street Journal reported that the airplane maker is examining all yet-to-be delivered 787 Dreamliners after finding hairline cracks in the wings of some planes in production. Boeing had more bad press this weekend after a 787 Dreamliner operated by Japan Airlines made an emergency landing on Saturday in Honolulu after the plane's GEnx engine malfunctioned.

While the engine malfunction is a minor issue, the delay of deliveries could be a major temporary obstacle similar to the one posed last year by the Dreamliners' battery problems. In the long term, though, both these issues will be minor compared to the Dreamliner's 50-year probable lifespan.

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