Dow Drops 67 Points on a Momentum-Crushing Day; Why Goldman, JPMorgan Should Worry

High-flying stocks suffered big reversals Tuesday as market sentiment got less frothy. Find out why financials were among the casualties today.

Mar 11, 2014 at 9:00PM

The Dow Jones Industrials (DJINDICES:^DJI) adds to its losses from earlier in the week on Tuesday, falling 67 points despite having gained ground early in the morning hours of the trading day. Most investors pointed to continuing worries about Russia and China as well as domestic economic factors that could weigh on future growth and the sustainability of the five-year-old bull market. But when you look at some of the stocks in the market that took the biggest hits, you'll find that they had been generally riding waves of upward momentum in the recent past. Within the Dow, that spelled trouble for financials Goldman Sachs (NYSE:GS) and JPMorgan Chase (NYSE:JPM), given their ability to benefit when markets are frothy.

Powering down
The biggest reversal in the market today came from the fuel-cell industry, where Plug Power dropped by more than 40% after negative comments from Citron Research asserted that the fair value for the company's shares was more than 90% below its current share price. Plug and its peers had soared over the past several days, as hopes that the alternative-energy industry would achieve a more mainstream presence on the heels of a deal with Dow component Wal-Mart to supply fuel-cell equipment for its distribution centers. Yet the violence of the drop showed that investors weren't willing to give Plug or its peers any benefit of the doubt, selling quickly in response to any threat to their profits.

Closer to the financial industry, similar speculative fervor played out in shares of Fannie Mae (NASDAQOTCBB:FNMA) and Freddie Mac (NASDAQOTCBB:FMCC). The two government-sponsored mortgage enterprises had seen their shares climb sharply over the past few months, as large institutional investors made bets that the federal government would be willing to make some concessions to existing shareholders in assessing the next step following its current conservatorship status. Yet lawmakers today didn't seem to make any such concessions, and that sent Fannie and Freddie shares plunging 25% to 30%.

For Goldman and JPMorgan, today's losses of 2.1% and 1.7% weren't nearly as problematic as those for fuel-cell companies and the mortgage giants. But the troubles in those sectors do pose a big threat to one of their biggest potential growth opportunities, because they throw cold water in the face of investors who had previously been willing to take greater risk in order to reap the huge rewards that stocks have provided over the past five years. Any reminder that risk can actually result in big losses could make investors pull back from the market, and that in turn would bode ill for the business that Wall Street firms do in helping companies go public and raise capital from investors. With other potential headwinds, including the possibility of rising interest rates, bad news from the most aggressive end of the stock market is the last thing JPMorgan or Goldman need right now.

Don't let risk wreck your investments
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Goldman Sachs and owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers