28 of 30 Dow Stocks Falling Today

The Dow Jones Industrial Average (^DJI -0.11%) is dropping as signs point to the Chinese economy getting close to slowing down. As of 1:30 p.m. EST, the Dow was down 128 points to 16,448. The S&P 500 (^GSPC 0.02%) was down 17 points to 1,831.

There were three U.S. economic releases today.

New unemployment claims were little changed from their previous level, while the four-week moving average increased by 8,500 to 357,250 as unemployment claims temporarily spiked in the middle of the month. While recent results are all over the place, stemming from some reporting errors, the important thing to note is that unemployment claims continue to trend lower.

U.S. Initial Claims for Unemployment Insurance data by YCharts.

Both purchasing managers' indexes show the U.S. manufacturing sector expanded in December. However, the market today is focused on the Chinese purchasing managers' indexes from the Chinese National Bureau of Statistics and HSBC, which were released Tuesday night and Wednesday, respectively, while the U.S. market was closed.

Both purchasing managers' indexes dropped and are nearing 50. PMIs above 50 indicate economic expansion while readings below 50 indicate contraction. Investors are worried about economy of China, which is in the midst of a credit bubble. The Communist Party is trying to deflate the bubble while not slowing the economy too much. At the same time, the party is trying to make the economy less dependent on exports and infrastructure projects and more consumer-based. As part of this goal the Chinese government was slow to provide extra liquidity when the interbank lending rate for short-term loans spiked for the second time in less than six months. China has been one of the leaders of the world economic recovery, but it is a risk to future growth due to the large credit bubble. If the bubble pops and the economy slows, world economic growth will be hit hard.

With high valuations and the possibility of slowing economic growth, the Dow has sold off today, putting 27 of 30 stocks in the red.

Today's Dow leader is Wal-Mart (WMT 1.32%), up 0.66% to $79.21. Wal-Mart is unique among Dow stocks in that more than 70% of its revenue comes from the United States. U.S. companies have been becoming more international to the point that nearly 40% of their profits come from their global operations. Even Wal-Mart is slowly expanding to China, which could be the retailer's next huge growth market if it can get its business model to work there. For now, though, Wal-Mart is set to benefit as the U.S. economy strengthens and China looks likely to slow.