Yesterday, the Dow Jones Industrial Average (^DJI 0.42%) took off after a few companies announced decent earnings, an ADP job report that was positive, and an increase in the PMI index. All these events, on the surface, seemed to show that the economy was moving forward. But then, after today's decent job report, the markets turned sour and, as the closing bell rang, the Dow sat at 13,093, down 139.46 points, or 1.05%. Twenty-five of the Dow's 30 components closed in the red. This afternoon, I explained why Chevron (CVX -0.11%), ExxonMobile (XOM 0.26%), and Travelers (TRV -0.23%) were moving lower; now I'll explain why things that looked good yesterday looked bad for Alcoa (AA), IBM (IBM 0.22%), and Caterpillar (CAT 0.60%) today.

So why are they down?
The first thing I noticed when I saw the Purchasing Manager's Index yesterday was that it was up, and things, on the surface, looked good. But, after digging a little deeper, there was a nasty-looking trend developing. The Index follows 18 different manufacturing industries; eight were growing, and eight were contracting. Not too bad, because the eight that were growing grew more than the eight that were shrinking. But, what worried me, was that five of the eight growing industries manufactured disposable products, or one-time use items. These industries include: Petroleum and Coal, Paper Products, Food, Beverage, and Tobacco Products, Plastics and Rubber Products, and Chemical Products.

The eight industries that were contracting produce products that are generally considered durable goods. The industries are: Primary Metals, Wood Products, Machinery, Fabricated Metal Products, Transportation Equipment, Appliances and Components, Computer and Electronic Products, and Nonmetallic Mineral Products. As you can see, all of these industries represent products that are used long term, and likely cost more than the items sold by the eight industries that experienced growth. Also, notice the three companies that were down the most today: Alcoa, down 1.14%, Caterpillar, lower by 2.12%, and IBM, which lost 1.89% during today's session. All companies that are represented in the eight contracting industries, and all three companies that I just mentioned, moved higher yesterday.

So why were they higher yesterday and down today? I believe that traders put this information together with the fact that unemployment is not really getting better; actually, the unemployment rate reportedly rose to 7.9%, from 7.8% last month. Most economists believe that, in order to get unemployment lower, we need to get construction moving again. This PMI report clearly shows those types of industries are contracting, and the unemployment numbers confirm the belief of economists that these industries drive job growth.

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