Why the Dow Fell Today

A weak consumer credit report and disappointing news out of China helped send stocks lower.

Jeremy Bowman
Jeremy Bowman
Sep 10, 2012 at 12:00AM

After running flat for most of the day, the Dow Jones Industrial Average (INDEX: ^DJI) took a dive late in today's session to finish down 52 points, or 0.4%. Still, the blue chips outperformed the S&P and Nasdaq, which fell 0.6% and 1%, respectively.

Consumer credit numbers for July, which came out at 3 p.m. ET, showed a monthly decline for the first time in nearly a year, considered a negative short-term signal for the economy. Total borrowing slowed by $3.3 billion, but the market had been expecting a $10 billion increase. Countering that effect was the Federal Reserve's revision of June borrowing figures up by $3.3 billion to $9.8 billion.

Also adding to the market pessimism was a report that showed China's imports unexpectedly shrinking in August by 2.6%, a bad sign for its many trading partners, which have come to depend on its huge appetite for the commodities that have fueled its voracious growth. Analysts now believe China's GDP growth, which slowed to 7.6% in the latest quarter, will rebound late this year or early next year. China's president also cautioned that growth could further slow.

Looking at individual stocks, Intel (Nasdaq: INTC) led the march downward, falling nearly 4%. The drop seemed to be a continuation of last Friday's similarly sized decline, when the chipmaker reported that its third-quarter revenue should come in about $1 billion less than initially predicted. Intel cited general weakness in the PC market, as demand in emerging economies has slowed for the end product, with PC-makers such as Dell and Hewlett-Packard struggling.

Boeing (NYSE: BA) was also down significantly, falling 2.5% as it mucks through labor negotiations. The aircraft maker is attempting to move 23,000 of its engineers to a 401(k)-style retirement program, instead of the pension plan the union desires. Rival Airbus reported after hours that it's struggling to meet its sales target of its A380 superjumbo jets after inspections revealed hairline cracks in the wings, an issue that could present an opportunity for Boeing.

Bank of America (NYSE: BAC) also fell 2.5% as the company announced that it's replacing its head of European equity research as part of a larger shakeup within its research department. Revenues from the trading and wealth-management departments have stalled recently, and the bank also said it's now attempting to grow by adding new loans to mid-sized and large companies.

No Dow stock gained more than 1% today, and looking ahead to the rest of the week, market watchers will want to look out for the Federal Reserve's interest-rate decision and any potential announcement on additional stimulus on Thursday. The central bank's decision is much anticipated after last week's disappointing employment report. Economists expect the Fed to keep the benchmark rate at 0.25%.

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