Why the Dow's Giving Up Yesterday's Gains

The market giveth, and the market taketh away. After a strong start to the new month yesterday, stocks reacted to a weak number on private-sector job creation as well as the biggest drop in factory orders for manufactured goods in three years. In addition, as European markets reopened after the May Day holiday, concerns over economic conditions there also resurfaced. Just before 10:45 a.m. EDT, the Dow Jones Industrials (INDEX: ^DJI) were down 65 points to 13,214.

Among Dow stocks, Alcoa (NYS: AA) was the biggest loser, falling almost 2% as its Alcoa-Alumina (NYS: AWC) joint venture cut its targeted output for 2012 by 3% to 15.5 million metric tons. With Russian aluminum giant Rusal announcing potential smelter shutdowns, it's clear that the aluminum market is unfavorable, boding ill for Alcoa's near-term future.

Banks were also among the average's big losers, with Bank of America (NYS: BAC) and JPMorgan Chase (NYS: JPM) both down more than 1.5%. Reports yesterday said that B of A plans to make 2,000 job cuts in its investment banking, commercial banking, and foreign wealth management areas. Meanwhile, both JPMorgan and B of A remain sensitive to changing economic conditions, especially given the pressure that the Federal Reserve is starting to feel between keeping interest rates low to spur economic growth and tightening up on its monetary policy to avoid future inflation. As a result, you should expect shares of B of A, JPMorgan, and other big banks to fluctuate with as much volatility as new economic data warrant.

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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 Bank of America and JPMorgan Chase. 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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