It took just a couple days for the mood on Wall Street to change dramatically, with excitement about new record highs for several market benchmarks giving way to fears about the sustainability of the U.S. economic recovery in the face of challenging conditions abroad. As of 11:55 a.m. EST, the Dow Jones Industrials (^DJI -0.90%) were down 108 points, adding to yesterday's 85-point drop. Contributing to the gloomy mood were slightly weaker new private-sector job figures than investors had expected, along with further crude-oil price drops as inventory levels climbed. Caterpillar (CAT -1.57%) led the Dow's downward trend, while Wynn Resorts (WYNN -1.67%) was among the weakest performers in the Nasdaq 100 index.
Caterpillar's 2% loss likely came from its exposure to the commodities markets. The heavy-equipment maker has increasingly relied on customers in the energy and mining industries to drive growth, yet the huge drop in oil prices has led many oil and gas exploration and production companies to rein in capital spending until the market stabilizes. With many potential customers expected to cut oil and gas production, their need for more equipment could stay low for the foreseeable future, and that could weigh further on Caterpillar's prospects. Even as the U.S. construction industry looks more promising, difficult conditions abroad suggest Caterpillar might have to wait a long time before it once again enjoys the international growth that helped send the stock to all-time highs in 2011.
Meanwhile, Wynn Resorts' stock dropped 2.5% as investors increasingly worry about a combination of macroeconomic and company-specific issues. On one hand, revenue in the casino company's key market of Macau plunged by almost half in February, with even the Chinese New Year holiday failing to bolster figures. Given Wynn's exposure to Macau, investors worry that the gaming market in the Chinese special administrative region could be in for even tougher times. Wynn and some of its competitors still have expansion projects under way in the Asian gaming capital that could exacerbate problems in coming years if Macau doesn't rebound. Meanwhile, CEO Steve Wynn faces a battle over whether his ex-wife should retain her seat on the company's board of directors. Wynn Resorts does not intend to renominate Elaine Wynn to the board, but she reportedly plans to nominate herself. With Wynn's annual meeting scheduled for April 24, it could be weeks before the dispute is resolved.
With the stock market posting strong gains in February, a slight pullback isn't yet cause for concern. But with investors already having waited for years for a significant correction in the 6-year-old bull market, you're likely to see nervousness continue over any potential reversal in the market's gains.