The Dow Jones Industrial Average (INDEX: ^DJI) fell for a third straight day, giving a slight blemish to the rally that's gripped the broad market indexes since the start of the year. Driven by weak economic signals from both Europe and China, the Dow shed 0.6%, or 78.5 points. Both the S&P 500 and Nasdaq both ended in the red as well, dropping 0.7% and 0.4% respectively.
In Europe, the eurozone's Purchasing Managers Index dropped to its lowest point in the past three months, to 48.7. Any reading of this measurement under the level of 50 indicates an economic contraction, further supporting the notion that the eurozone is already in the midst of another recession, especially since its economy contracted 0.3% last quarter (an official recession requires two consecutive quarters of contraction). On a similar note, HSBC's Purchasing Managers Index for China also declined to its lowest point in four months, underscoring the notion that China's rate of growth is slowing. That's alarming, especially given the weak economic condition of the developed world's economies.
Around the markets
Further exacerbating concerns over the health of the global economy, shipping powerhouse FedEx (NYSE: FDX) fell 3.5% after releasing a relatively negative outlook for its earnings and reducing its forecast for economic activity. Given the fears of a softening economy, cyclical stocks took a beating during the trading session. Aluminum juggernaut Alcoa (NYSE: AA) got thrashed, declining 2.5%. Similarly, construction heavyweight Caterpillar (NYSE: CAT) dropped 2.4%. Both companies have been on a tear since the start of 2012, having risen 15.7% and 17.8%, respectively. Rounding out the Dow's worst performers today, oil mammoth Chevron (NYSE: CVX) fell 2.4%, with concerns surrounding its potential liabilities related to an oil spill off the coast of Brazil scaring investors away. The Brazilian regulator charged with assessing blame in the matter said the oil leak in question was indeed caused by "mistakes."
What it all means
No investor likes to see the value of his holdings decrease. Especially on days when the market falls markedly, investors always need to step back and remember that investing for the long term is the best road to a happy retirement. However, if you can take these occasional lumps in stride and dismiss them as only temporary, investors will give themselves the best chance of succeeding when they need their nest eggs.
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Fool contributor Andrew Tonner holds no financial position in any of the companies mentioned in this article.Motley Fool newsletter serviceshave recommended buying shares of FedEx and Chevron. We Fools don't 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. The Motley Fool has adisclosure policy.
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