The Dow Stumbles on Mixed Economic Messages; Financials Fall Furthest

The Dow Jones Industrials need strong manufacturing activity in order to keep expanding, and today's data raised questions on that front.

Jun 2, 2014 at 11:00AM
Longview

The Dow Jones Industrials (DJINDICES:^DJI) opened the week on a mixed note, initially jumping to a new record level before falling back by nine points as of 11 a.m. EDT. With earnings season just about over, most market participants are paying more attention to economic data to see if the bull market can last, and key measures of manufacturing activity and construction spending didn't provide the unequivocal bullish sentiment that investors wanted to see. Yet even with lukewarm readings on the industrial sector of the economy, financial stocks JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) were the hardest-hit Dow stocks in early trading.

Www
Source: Flickr.

News of more potential legal liability for JPMorgan Chase likely led to this morning's fall, as the city of Los Angeles in a lawsuit filed Friday accused the banking giant of discriminatory practices in mortgage lending and foreclosure activity. For some reason, JPMorgan hadn't been included in suits the city filed six months ago against other major banks, but it's clear that JPMorgan and other institutions can expect similar legal actions from other city and county governments across the nation. The never-ending litany of litigation is wearing down sentiment for investors in financial stocks both within and outside the Dow Jones Industrials, as many had hoped that resolutions of federal- and state-level disputes would be the end of the matter.

Another interesting development that could affect Goldman Sachs, JPMorgan Chase, and other players in the securities industry was the decision by the Financial Industry Regulatory Authority to start providing more information about trading in nontraditional market venues, including dark pools. Given the recent exposure that dark pools have gotten, most recently in the book Flash Boys from Michael Lewis on high-frequency trading, greater transparency was almost inevitable as a way for FINRA to address issues that could eventually become the subject of more formal regulatory efforts. As time goes by, major firms could change their practices when it comes to dark pools, especially if public perception becomes even more negative.

The problem for Goldman Sachs, JPMorgan Chase, and other investment firms is that financial regulation has already diminished their ability to earn profits from their traditional lines of business. As a result, investors in the Dow Jones Industrials can expect a constant back-and-forth as big banks seek new ways to profit while regulators clamp down on what they see as trouble points for the customers they aim to protect.

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of JPMorgan Chase. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

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.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

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. It's also featured on several dozen 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 ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers