The Dow Jones Industrial Average (INDEX: ^DJI) dove by 78 points Thursday, or 0.6%, extending its slide to 1.5% for the week. Foreign markets appeared to be the culprit, as poor factory reports out of Europe and China soured investors at home. German and French manufacturing reports came in lower than expected, and China reported a drop in manufacturing activity for the fifth month in a row. Wen Jiabao's government is now eyeing 7.5% growth this year, its lowest rate in eight years. Investors should remember, though, that China actually wants its growth to slow to decrease inflation, promote stability, and alleviate the income inequality that has been endemic in its economic rise.
The biggest losers
With the lowered outlook out of China, Dow cyclicals took the hardest hit. Alcoa (NYSE: AA) fell 2.53%, while Caterpillar (NYSE: CAT) dropped 2.36%, as both count the Asian power as a major customer. Caterpillar currently has 17 plants in China, with nine more under construction, while Alcoa has invested nearly $800 million in the country since 1993.
Chevron also had a day to forget, falling 2.37% as Brazil filed criminal charges against the company as well as Transocean (NYSE: RIG), for its November offshore oil spill. The legal trouble forced shares of the rig operator down 2.77%. Brazil's oil regulator released a report after trading hours saying the companies had made mistakes but that it would not charge them with negligence. Compared with the BP oil spill in the Gulf of Mexico, the Chevron spill was minor -- less than 0.1% of BP's total spillage. It was quickly controlled and never reached land.
Now for the good news ...
More promising numbers came out of the Labor Department as the number of job seekers filing for unemployment benefits hit a four-year low of 348,000 in the week ended March 17. The moving four-week average also hit its lowest point since 2008, suggesting that the robust job growth of the previous months has continued through March.
Of particular interest to investors, Congress passed a scaled-down version of the STOCK Act, a bill that prevents insider trading by members of Congress in specific ways that enhance insider trading laws. The limited version of the bill eliminated, among other things, a line item that would have required individuals involved in the "political intelligence" industry, which involves selling information on potential future policy to investment firms, to register with Congress as lobbyists do. Two lawmakers introduced a separate bill in February to address that concern. GE (NYSE: GE) tops the list of Congress' favorite stocks, with 75 members holding its shares, and the conglomerate spent more money than any other company on federal lobbying. Nine of Congress' top 10 most common holdings were Dow stocks.
Finally, oil prices fell almost 2% on the news out of China to their lowest level in a week, offering drivers some relief at the pump. President Obama, speaking at the oil hub in Cushing, Okla., underscored his support for all forms of energy and called for permits to be expedited so TransCanada could build the southern extension of the Keystone XL pipeline, which would connect Cushing with Gulf coast refineries. In January, the president rejected the northern part of the pipeline, connecting Alberta's oil sands to Cushing, in a move many saw as politically motivated.
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