2 Industrial Giants Drag the Dow Lower Today
In the absence of major economic data releases, the Dow Jones Industrial Average had dropped more than 120 points, or 0.74%, by midafternoon and is on pace for the index's worst three-day performance in roughly two months. Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, addressed market worries in a Reuters article
The big concern is the overall underlying weakness in so many different stocks. The picture isn't nearly as pretty when you look under the hood and you see various sectors have clearly broken down and now it's starting to pull down on the whole entire stock market.
With that in mind, here are two companies doing their part to drag the Dow lower today.
Caterpillar , the world's largest global manufacturer of heavy equipment, was trading 1.2% lower in the faces of negative headlines over the last week regarding tax evasion and layoffs.
Caterpillar laid off another 60 employees at a South Milwaukee, Wis., plant as demand for mining equipment has failed to rebound. It's the continued trend of layoffs that worries investors. Last year, Caterpillar cut its worldwide workforce by 13,000 employees, including 400 from Milwaukee and South Milwaukee.
"While some cost reduction measures have already been implemented, further measures must be taken in the near term. We know this is difficult for our employees and their families, but we must take steps to position the company for long-term success," Caterpillar said in a statement quoted by the Miwaukee Journal Sentinel.
The bad news for employees is that Caterpillar's business doesn't look likely to improve in the near term. Caterpillar is highly exposed to the mining end market, which is facing depleted demand and lower commodity prices due to the slowing Chinese economic activity. Industry analysts predict the mining industry could remain in a tough spot through 2014 and perhaps another year after.
Boeing was trading 1.2% lower by midafternoon. Late last week, the U.S. Treasury Department issued a license to Boeing that would allow the company to sell airplane parts to Iran. While most don't expect relations between the U.S. and Iran to fully normalize anytime soon, this is a step forward and a sign that relations are likely better now than they have been since the 1979 Iranian revolution.
While the license only allows the U.S. company to sell a few components to help increase the safety Iran's aging fleet of Boeing aircraft, the big takeaway for investors is that a day might come when Boeing would be allowed to sell commercial airplanes to Iran.
Iran has several airlines that are all faced with a rapidly aging fleet of commercial aircraft, and Boeing would love to send a few 737 or 777's their way. A senior Iranian official told Reuters in November the country might need between 250 and 400 jets if sanctions were lifted in their entirety.
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The article 2 Industrial Giants Drag the Dow Lower Today originally appeared on Fool.com.Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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