Why the Dow's Falling Hard This Morning

Updated

Investors can't make up their minds. Earlier this week, the stock market gave up ground in the biggest plunge of the year. Then two days of gains reversed many of those losses. Today, though, worries are again taking center stage, as China's GDP growth came in slower than expected and higher food and gasoline prices helped spark the Consumer Price Index to a 0.3% jump. As of around 10:45 a.m. EDT, the Dow Jones Industrials (INDEX: ^DJI) were down 98 points to 12,888, while the S&P 500 (INDEX: ^GSPC) fell 13 points to 1,375.

All but two of the Dow's components traded lower. As you'd expect, among the hardest-hit were the economically sensitive Alcoa (NYS: AA) and Bank of America (NYS: BAC) . Alcoa needs a strong Chinese economy to support aluminum prices and eventually bring back greater profitability, even though strong levels of aluminum output within China are among the culprits holding prices back.

B of A, on the other hand, could get hurt from reports of weaker consumer sentiment. Its credit card business relies on consumer spending, and loan activity is also driven by sentiment. Although Wells Fargo (NYS: WFC) beat earnings expectations this morning, those results weren't enough to keep its own shares from dropping -- and B of A still needs to establish that it's in equally good shape as Wells Fargo.


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At the time thisarticle was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter here. The Motley Fool owns shares of Wells Fargo and Bank of America, and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo. 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 Fool has a disclosure policy.

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