Why the Dow Continues to Crash Today

After an incredible three-month run the Dow Jones Industrial Average (INDEX: ^DJI) has sharply reversed course. The index has put up a five-day downward spiral, erasing a large part of the year-to-date gains it fought so hard to earn. Here is a look at how the major indexes are doing right now:

Index

Gain (Loss)

Gain (Loss) Percentage

Intraday Value

Dow Jones Industrial Average

(200.2)

(1.6%)

12,729

Nasdaq

(51.1)

(1.7%)

2,996

S&P 500

(21.9)

(1.6%)

1,360

Source: Yahoo! Finance.

What's causing the commotion?
It's the economy, stupid! The market's broad slide today is anchored to disappointing news about the US economy, which disappointingly dovetails well with Friday's less-than thrilling unemployment data. While Greek debt fears seemed to have subsided from their peak only a few months ago, the Eurozone is back to haunt us. The whole region is marred with debt and weak economic prospects, and now many are looking to Spain as the next ticking time bomb.


Of course we can't heap all of our woes on Europe, high gas prices and concerns about Iran continue to cause real worries for investors. Not only that but The Fed has indicated there would be no additional quantitative easing, news that hit the 2012 Dow Starlets Bank of America (NYS: BAC) and JP Morgan (NYS: JPM) particularly hard.

Despite the news though they are still the top two performing Dow stocks for the year, and continue to look cheap with regard to their price to book ratio. Taking another step back, the Dow is still up more than 4% for the year which isn't a bad pace.

An inflection point?
Alcoa
(NYS: AA) unofficially kicks off earnings season after the market closes today. They are the first Dow component to report, and investors are hoping they put up big numbers as a sign of better times ahead. Unfortunately, after nine quarters of earnings growth, FactSet is now projecting a decline in earnings growth. This makes sense given slowing China growth and a shaky Europe, but the silver lining is that muted expectations are easier to beat, so go get 'em Alcoa! Make us proud.

After Alcoa it's JP Morgan reporting on the 13th, and then a flood on the 17th with IBM (NYS: IBM) , Intel, Johnson & Johnson, and Coca-Cola all reporting. All four are long-term conviction stocks of mine, so I'll be watching very closely to see if they signal good things to come, or a continued slowdown.

How to play it
Watching the broad market each day is exciting, gut-wrenching, and stressful, but investing doesn't have to be. If you're in the mood to pick up a great company to buy for the long term, The Motley Fool has created a brand-new free report: "The Motley Fool's Top Stock for 2012." It features a company hand-selected by the Fool's chief investment officer that has a strong future ahead of it. Get access to the report and find out the name of this legendary company. The report is free, but won't be forever, so check it out today.

At the time this article was published Austin Smith owns shares of Coca-Cola and Intel, but no other company mentioned here. The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Johnson & Johnson, and Intel. Motley Fool newsletter services have also recommended creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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turk182sh

http://video.google.com/videoplay?docid=-515319560256183936#

April 10 2012 at 9:43 PM Report abuse rate up rate down Reply
GrayHatsBeGone

IBM CHAIRMAN SAM PALMISANO - IS HE A COWARD ???

IBM's new Female CEO should have celebrated her 1st 100 days on a high note.

But that was not the case because IBM Chairman Sam Palmisano spent $10-15M while allowing

Virginia Rometty to be discriminated and humiliated.


Details and links --

www.ibmTheWidowMaker.com

www.TWITTER.com/MadamePJBailey (IBM Widow)

April 10 2012 at 3:28 PM Report abuse rate up rate down Reply