Why the Dow Is Tanking

Before you go, we thought you'd like these...
Before you go close icon

As the second week of 2012 comes to a close, markets will have to rally back if they want to end on a positive note. Disappointing earnings from a major Wall Street bank and renewed fears concerning the European Union combined to lead all three major indexes lower.

But before we jump into the morning's events, let's see how the three largest indexes are faring after the first hour of trading.

Index

Gain / Loss

Gain / Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI) (132.82)(1.07%)12,338.20
Nasdaq (INDEX: ^IXIC) (28.95)(1.06%)2,695.75
S&P 500 (INDEX: ^GSPC) (14.85)(1.15%)1,280.65

All three indexes have erased yesterday's gains and then some. We are also seeing declines in the euro, 10-year Treasuries, gold, and oil (which is now under $98.50 a barrel). Every one of the 30 Dow stocks is in the red as Standard & Poor's prepares to lower the credit ratings of several European nations.

It appears the optimism ahead of earnings season -- especially after Alcoa put out decent guidance earlier in the week -- is gone. JPMorgan Chase (NYS: JPM) witnessed a 23% drop in earnings for the fourth quarter, sending shares down 4%. Investment banking revenue was cut by nearly a third and its mortgage division has returned to racking up losses, but the bank did see an increase in loan growth, which could be a sign the economy is improving. Since JPMorgan is considered one of the better-managed operators, it's no surprise that the Direxion Financial Bull 3X (NYS: FAS) levered ETF is plunging down more than 5% as banks across the board are getting slaughtered.

Watching the broad market each day is exciting, gut-wrenching, and stressful. 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. I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company. The report is free, but won't be available forever, so check it out today!

At the time this article was published David Williamsonholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners