Will the Dow Fall Under 13,000?

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The markets were trading lower this morning, essentially erasing all the gains from Monday's Ben Bernanke fueled run. While showing some sequential improvement, initial claims data came in significantly higher than expected, dampening enthusiasm that this recovery is anything but stubbornly slow. Not surprisingly, commodities are trading lower in response and oil is down 2% to $103.

Let's take a closer look at how the major indexes are doing and some individual stocks making headlines.

Index

Gain/Loss

Gain/Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI) (82.68)(0.63%)13,043.53
Nasdaq(31.03)(1.00%)3,073.93
S&P 500(12.97)(0.92%)1,392.57

Source: Yahoo! Finance as of 12 P.M. EDT.


What is startling here is how perilously close the Dow is to dropping beneath the psychologically significant 13,000 level, especially after the huge gains that started the week. The S&P has already let 1,400 fall and, while 3,000 is certainly not in jeopardy, the Nasdaq is the worst-performing major index, down 1%. Considering the lack of volatility so far this year, the Dow should keep the 13,000 through the weekend. But investors need to watch for a bearish sentiment taking control of market opinion.

Of course the IPO market seems impervious to the bears lately, as we have seen two successful IPOs in as many days. After welcoming organic foods purveyor Annie's (NYS: BNNY) to the market with a 90% price increase, the best opening-day performance since LinkedIn in May 2011, investors are greeting e-tailer CafePress (NAS: PRSS) warmly. Although shares are only up 12% as of noon, the offering price was raised at the last moment from the estimated $16-$18 per-share price to $19, netting the company $85.5 million.

Conventional retailer Best Buy (NYS: BBY) looks anything but after reporting its fourth-quarter results. The holiday shopping season was not kind to the electronics retailer, which missed badly on the top line even with an extra week in its quarter, and indicated a shift away from its big-box formula. In conjunction with earnings, Best Buy reported focusing its attention toward mobile and will support that through 100 new locations, while simultaneously closing 50 of its big-box operations. One bonus will be an estimated $800 million in cost savings over the next three years. Whether that is enough to stem the tide of customers using Best Buy to browse merchandise before purchasing through cheaper competitors like Amazon.com (NAS: AMZN) and help it avoid the fate of Circuit City remains to be seen.

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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 Amazon.com, Best Buy, and LinkedIn.Motley Fool newsletter serviceshave recommended buying shares of LinkedIn and Amazon.com. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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