Why the Dow Fell Today


It was a down day for the market. The Dow Jones Industrial Average (INDEX: ^DJI) fell 0.84% to 11,766.26 today.

The S&P 500 (INDEX: ^GSPC) and Nasdaq (INDEX: ^IXIC) had similar performances, down 1.17% to 1,205.35 and down 1.26% to 2,523.14.

If we have to blame just one thing ...
Surveying the news from today, we find that not even the death of North Korea's Kim Jong-Il could overshadow Europe as the primary cause of stock market movement. At least not here in the United States.

Per The Wall Street Journal: "Stocks' fall steepened after Dow Jones Newswires reported European Union financial ministers couldn't reach an agreement to raise a ceiling on funds for the region's planned bailout efforts during a closely watched conference call Monday."

A more granular view
For the individual stock investors among us, we can also look at the big moves among the stocks that make up the Dow.

There were only three winners out of the 30 Dow companies: Merck (0.6%), Pfizer (0.5%), andCaterpillar (NYS: CAT) (0.1%). Note that Caterpillar reported November sales growth of 30% over last year's November, following similar growth rates in September and October.

Of the 27 Dow losers, the three biggest were:


Today's Stock Price Change

Bank of America (NYS: BAC)


JPMorgan Chase (NYS: JPM)


Alcoa (NYS: AA)


Source: S&P Capital IQ.

Beyond the European concerns that jostle bank and commodities stocks alike, Bank of America and JPMorgan got some specifically bad news. The Wall Street Journalreports that the Federal Reserve is likely to "embrace" global capital regulations set forth by the Basel Committee. That's a stance opposed to the lobbying efforts of the big banks, which are playing the "if you make us hold more capital, we'll have to reduce lending and hurt the economy" card. They play that card (and/or the liquidity card) at any sign of grown-up intervention.

The upshot is that under the Basel III regulations, JPMorgan, Bank of America, and the rest of the biggest banks in the world will have to meet increased minimum capital requirements over the next few years.

As you digest the day's news, remember that we're just looking at daily stock-price movements here. It's fun to check in on the news, but at The Motley Fool, we recommend investing for the long term. These daily price movements are just small blips in the bigger picture.

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At the time thisarticle was published Anand Chokkaveluowns shares of Pfizer, Bank of America, and JPMorgan Chase.The Motley Fool owns shares of JPMorgan Chase and Bank of America. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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