The markets continue to shuffle through variations of the same storylines, and today the picture got even cloudier after Europe and earnings both punished the markets, sending the Dow Jones Industrial Average
Moody's downgraded its Germany, Netherlands, and Luxembourg outlook to negative, while manufacturing shrank even more than expected in July for France and Germany. The misery spread throughout Europe, as Spanish bond yields hit a eurozone high, raising concerns about the country's need for a bailout, and reports showed that Greece may need to restructure its debt further. The news in and of itself means little, but it legitimizes concerns of a European recession that could have a devastating impact on the U.S. economy.
In fact, it may already be starting to hurt U.S. earnings. Some quality companies continue to reduce costs to account for slowing revenue growth, but investors would like to see more signs of a blooming market landscape. And today's fall didn't even factor in that the world's largest company, Apple, missed badly on earnings.
The company cushioned its losses much better than for-profit education company DeVry
But all the sour news couldn't sink telecommunications company MetroPCS
The investment climate is beginning to resemble an individual stock. If European problems disappear and the U.S. economy can stabilize growth, stocks could see incredible returns, at least based on the Dow's P/E of around 14. But on the other hand, the unstable market does mean an incredible amount of risk. So are the markets crying wolf?
For the smart investors, it doesn't really matter. No one knows how the macro landscape will take shape in the upcoming months, but quality companies will grow in the long run. Many of these companies even supplement this growth with dividends. So how do investors find the top performers? The Motley Fool's free report, "The 3 Dow Stocks Dividend Investors Need," identifies three stocks that will combine steady growth with consistent earnings. It's completely free, so get your copy before it's gone.
Fool contributor Will Chavey owns no shares of the stocks mentioned above. The Motley Fool owns shares of Citigroup, JPMorgan Chase, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Moody's and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.