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Why the Dow Is Sagging Today

Dan Dzombak
July 26, 2013

Despite better-than-expected consumer-confidence numbers, the Dow Jones Industrial Average (INDEX: ^DJI) is nearly 0.33% cheaper today after the Chinese government moved to cut excess supply in China. Investing is one of the few arenas in which people get disappointed by lower prices. As of 1:25 p.m. EDT the Dow is down 52 points, or 0.33%, to 15,504. The S&P 500 (INDEX: ^GSPC) is down 0.2% to 1,687.

Consumer sentiment rose from June's 83.9 to 85.1 in July, the highest level in exactly six years. Analysts had expected consumer sentiment to rise to 84. While consumers were optimistic about the economy, next week will provide much better measures of how well the U.S. economy is doing. On Wednesday the government reports the advance look at GDP, while ADP will report on private-sector employment. Then on Friday the government reports its employment report, as well as the personal consumption expenditures price index, the Federal Reserve's favored measure of inflation.

Despite consumers' positive sentiment, the market is flagging after the Chinese government directed 1,400 companies in 19 industries to cut excess capacity by the end of the year. The Ministry of Industry and Information Technology published a list of specific production facilities it has ordered to be closed. This will likely slow Chinese GDP growth