Why the Dow Jones Has Plunged Today

Financials are crushing the Dow Jones, while the broader stock market is being hurt by the tech sector's drop.

Apr 10, 2014 at 1:33PM

American Express (NYSE:AXP) leads the Dow Jones Industrial Average (DJINDICES:^DJI) down today as the financial sector drops. The broader stock market is being hurt by the continuing sell-off in the tech sector, which Dow tech stocks have so far avoided, given their relatively low valuations. As of 1:20 p.m. EDT the Dow is down about 200 points to 16,237. The S&P 500 (SNPINDEX:^GSPC) is down 30 points, or 1.64%, to 1,841.

The market is down despite two positive U.S. economic releases:





New unemployment claims

April 3 to  April 10



Import price index




The unemployment claims report hit its lowest level in almost seven years. Weekly unemployment claims fell to 300,000 from an upwardly revised 332,000. The four-week moving average dropped by 4,750 to 316,250.

US Initial Claims for Unemployment Insurance Chart

US Initial Claims for Unemployment Insurance data by YCharts.

Today's great unemployment claims report and dropping market illustrate perfectly the concept that the markets and the economy are not one and the same. While the economy and the jobs market are slowly growing stronger, the market already has much, if not all, of that growth priced in. The market has also priced in some high expectations for certain parts of the technology and biotech sectors. For this reason, whenever there is fear in the market, these stocks are hit hardest. The Nasdaq 100 is down 2.8% so far today, led downward by health care and biotech companies.

Dow component American Express had a victory today after a judge dismissed a lawsuit against accusing American Express, Citigroup, and Discover Financial Services of colluding to require disputes between customers and credit card companies to be settled through arbitration rather than lawsuits. Visa and Mastercard were not sued, as they only process transactions on behalf of banks. Banks themselves issue the cards and set the policies on them. This differs from American Express' and Discover Financial's business model, where they process transactions and issue cards to their members, taking on credit risk. In any event, this is a win for credit card companies and a loss for consumers, many of whom believe that arbitration clauses favor banks.

While stocks may fluctuate in the short term, the key to investing still remains buying great companies at good prices and holding for the long run.

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Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombakHe has no position in any stocks mentioned. The Motley Fool recommends American Express and Visa. The Motley Fool owns shares of Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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