The stock market had its second straight down week, with the Dow Jones Industrial Average (INDEX: ^DJI) ending down 1.6%, the S&P 500 (INDEX: ^GSPC) down 2%, and the Nasdaq (INDEX: ^IXIC) down 2.2%.

If we have to assign reasons for the market drop, we can split it up the blame by major global region:

  • In the U.S., the market has reacted negatively to Federal Reserve Chairman Ben Bernanke's stated reluctance in early April to buy more bonds to prop up the economy -- at least at the current time. After that, last week's March jobs report, while not terrible, still disappointed.
  • In Europe, there seems to be more and more coverage of each move in the yields and credit spreads of Spain and Italy. It's the latest focus of the European drama that has dominated slow news days for months.
  • In China, this week saw the reporting of first-quarter GDP growth of 8.1%. That may seem high, but it was disappointing to many, as it's the weakest growth number for China in almost three years.

But perhaps more notable than the market drop was the volatility. The Dow was up or down at least 1% for four of the five market sessions. That's a lot of volatility compared with the rest of 2012, but the markets have been especially calm recently. As my colleague Morgan Housel put it in late March: "Last year, the Dow Jones Industrial Average closed up or down more than 1% 89 times. In 2008 and 2009, it bounced up or down more than 1% over 100 times. Yet so far this year, it's happened only a few times."

All to say, we can never predict when and why the market will act up. All we can do is allocate our portfolios so we can sleep at night regardless.

The real news
Moving on to earnings season, which kicked off this week, two Dow components have already reported: Alcoa (NYSE: AA) and JPMorgan Chase (NYSE: JPM). Although their stocks reacted differently, both reports were strong.

Alcoa is up 2.3% on the week after reporting positive earnings -- a surprise $0.09 a share. Meanwhile, JPMorgan is down 2.5% after it also beat expectations and last year's tally -- $1.31 a share if you're scoring at home. As a JPMorgan shareholder who isn't looking to sell anytime soon, I'll take strong fundamentals and a lowered stock price over the opposite any day.

The strong performances of bellwether stocks Alcoa and JPMorgan bode well for the rest of earnings season. For a sneak peek of what's ahead, check out our report: "5 Stocks Investors Need to Watch This Earnings Season." Our analysts discuss what's ahead for Apple and four other must-watch companies. Access it now.