The 1 Number Moving the Dow This Morning


With only five positive sessions during the month, the 6.2% May decline for the Dow Jones Industrial Average (INDEX: ^DJI) marks the worst monthly performance for the index since the May 2010 flash crash. As we begin a new month, are investors in store for some June gloom? The answer may well lie in a piece of economic data out this morning: nonfarm payrolls.

After monthly declines in March and April, the pace of hiring in the U.S. is viewed as a key indicator of the health of the economy. Expectations call for gains of 150,000 jobs for May, a small but meaningful rebound from April's 115,000, which was down from gains of more than 200,000 earlier this year.

This data release plays a vital role in the unemployment rate calculation, but I'm more interested in the kinds of jobs being created. After all, adding quality, higher-paying jobs will go a lot further in supporting personal income growth, consumer spending, and the broader economy going forward.

Sales revving up
Other than the usual euro-land craziness, today we receive an update on May auto sales from the likes of General Motors and Ford (NYS: F) , among others. Expectations call for 30% annual growth in aggregate U.S. sales to 1.4 million vehicles. While the Dow is setting recent records for its poor performance, if the automakers meet expectations, it will mark a five-year record for the industry. Estimates from call for GM and Ford to post gains of 17% and 11%, respectively. Japanese automaker Toyota is expected to see a massive 90% lift as it recovers from weak sales following last year's earthquake and tsunami.

Give me a "W" (and I'll give you a twenty)!
The calendar is relatively light for Dow components today, with one notable event being Wal-Mart's (NYS: WMT) annual shareholders meeting. Don't expect the company's 50th-anniversary balloons to lighten the mood too much, as numerous investors are likely to voice their displeasure with recent bribery allegations at the company's Mexican subsidiary, Wal-Mart de Mexico (OTC: WMMVY). One such investor is the nation's largest public pension fund, California's CalPERS, which plans to vote against nine of the 16 board nominees, including current CEO Mike Duke, former CEO Lee Scott, and chairman Robson Walton.

Investors are serious about the bribery scandal, but so are Justice Department officials. Wal-Mart's problems south of the border are currently under investigation, and it could result in some serious fines if the company is found in violation of the Foreign Corrupt Practices Act. German conglomerate Siemens (NYS: SI) was fined for an FCPA violation in 2008 and paid upwards of $1.6 billion in total fines between the U.S. and Germany for its transgressions.

If we can learn one thing from Wal-Mart's dilemma, it's that there is both a right way and a wrong way to pursue growth in Latin America. With only a small base of stores and no U.S. presence to speak of, "The Motley Fool's Top Stock Stock for 2012" has placed its sole focus on this booming region and could stand to benefit from the scandal in which one of its largest competitors is embroiled. Boasting a visionary leader at the helm and operating metrics that make some of its U.S. peers green with envy, this company is one our chief investment officer thinks has serious long-term potential. Find out what company this is and how you can participate in the growth by reading this special free report. It won't be around forever, so click here for your copy today.

At the time thisarticle was published At the time of this writing, Brenton Flynn owned no stake in the companies mentioned. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores. Motley Fool newsletter services have recommended creating a synthetic long position in Ford. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Originally published