Please ensure Javascript is enabled for purposes of website accessibility

The Cause of Today's 111-Point Dow Drop

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.