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Manufacturing Data Hurts the Dow

By Matt Thalman - Apr 1, 2013 at 12:03PM

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The ISM factory index numbers point toward a slowdown.

As of 12:55 p.m. EDT the Dow Jones Industrial Average (^DJI -0.42%) is down a mere 15 points, or 0.1%. The other major indexes are faring worse so far: The S&P 500 has dropped 0.45% while the NASDAQ is down 0.77%.

A widely followed data point released today is likely causing the markets to fall. The Institute for Supply Management's factory index was released this morning, and it fell from 54.2 last month to a 51.3 in March. Any figure greater than 50 represents growth, but a higher number would indicate growth at a faster pace.

Today's top Dow downers
The poor ISM numbers are likely hurting a few of the Dow's losers today. Shares of Alcoa (AA) are down 1.9%, while Caterpillar (CAT -2.54%) has lost 1.5%, and United Technologies (RTX -4.23%) is even down 0.4%. Caterpillar's decline should not be a shock to anyone who saw its February sales numbers, which were disappointing, to say the least. And when sales are lower, we should expect lower production as demand flags.

As for Alcoa, the company has struggled for more than a year now as aluminum prices remain at a depressed level due to oversupply in China. The one possible good data point for Alcoa today was the gauge of U.S. manufacturer stockpiles, which also continues to fall, moving from 47.5 to 46.5. Anything below 50 indicates that stockpiles are shrinking.

Anytime a report like this comes out, a company like United Technologies is going to take a slight hit, as it is today. This report gives investors a heads-up that big manufacturers aren't knocking it out of the park, likely resulting in lower revenue and profit during the quarter.

Outside of manufacturing, shares of Intel (INTC 0.96%) are down 2.2% after the stock was downgraded by JMP Securities' Alex Guana. The analyst believes Intel's full-year EPS will be lower than the $2.15 he had previously expected. A new target of $1.85 per share was set for this year, and he even lowered his EPS estimate for next year from $2.25 to a measly $1.70. Guana believes there may be a delay with delivery of some of Intel's' new microprocessors, which would ultimately hit earnings.

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Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
INTC
$36.69 (0.96%) $0.35
Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$173.76 (-2.54%) $-4.53
Alcoa Inc. Stock Quote
Alcoa Inc.
AA
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
RTX
$92.92 (-4.23%) $-4.10
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,967.82 (-0.42%) $-129.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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