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The Cause of Today's 111-Point Dow Drop

By John Divine - Apr 3, 2013 at 6:01PM

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Nine in 10 blue chips fall as the market digests new employment data.

This has been a great year so far for Wall Street: The Dow Jones Industrial Average (^DJI 0.03%) is already up more than 11% in a year characterized by record-setting highs and massive corporate profits. A bullish market is great, but it can be tougher for investors to stomach disappointing news in the middle of such a run-up. Wednesday's payroll figures -- showing private-sector employment that rose by nearly 160,000 jobs in March -- didn't quite live up to Mr. Market's demands.

Throw in some unwelcome news from the Federal Reserve, and you have the makings of a 100-plus-point drop. The Dow ended 111 points, or 0.8%, lower, at 14,550.

Only 10% of Dow stocks advanced today, and Merck (MRK 1.58%) ended the day as one of those cherished few. Its 1% rise was good enough for tops in the Dow, as investors flocked to the stock's 3.9% dividend. The market may be cheering encouraging new research from the company, making inroads on a sleep drug that doesn't inhibit patient memory or attention, two common areas that today's sleep aids affect. 

Despite paying a 4.1% dividend of its own, Intel (INTC -0.86%), regrettably, lacks any promising leads for new life-changing products of its own. Heck, it can barely keep up with its competitors. The stock, down 25% in the past year, fell 1.9% today, after the departing CEO's 2012 remuneration came in at around $19 million. The 10% pay raise came the same year EPS slipped 10%.

But Wednesday's biggest blue-chip decliners were financials: JPMorgan Chase (JPM -0.82%) and Bank of America (BAC -1.71%) slumped 3% and 2.8%, respectively, on concerns about the private sector's robustness. Perhaps a larger issue concerning the big banks today is the longevity of the Fed's bond-buying program, intended to stabilize a recovering U.S. economy. A top Fed official told an audience today that the central bank may need to ease up on the bond purchases later in the year as the economy strengthens.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,261.90 (0.03%) $8.77
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$33.86 (-1.71%) $0.59
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$117.34 (-0.82%) $0.97
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$93.55 (1.58%) $1.46
Intel Corporation Stock Quote
Intel Corporation
INTC
$41.65 (-0.86%) $0.36

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

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