Why the Dow Dropped Late Today

The Dow Jones Industrial Average (INDEX: ^DJI) had another up-and-down day today, dropping into the red for good at around 2 p.m. ET and finishing down 77 points. The day started out poorly as a Commerce Department report showed U.S. retail sales fell 0.2% in May -- not a particularly encouraging result, and one that could lead analysts to lower future U.S. economic growth projections. The report also showed that consumers spent less at gas stations as prices fell, which helped push benchmark crude oil down to under $83 per barrel to settle at its lowest level since October.

In news that will undoubtedly shock every investor reading this, Europe was also partly responsible for the Dow's dip and the end of the day. Which country was the main culprit today? Step on up, Italy! Investors were concerned today over sharp rises in borrowing rates for Italy's 12-month bonds. But the real test will be tomorrow as the country issues longer-term debt.

Here's how three major U.S. indices fared on the day:



Ending Value

Dow Jones Industrial Average

-77.42 [-0.62%]


Nasdaq (INDEX: ^IXIC)

-24.46 [-0.86%]


S&P 500

-9.30 [-0.70%]


American Express (NYS: AXP) was the Dow's biggest loser on the day, dropping 2.44%. Vice chairman Ed Gilligan said credit card spending increased 9%-10% in the U.S. and worldwide, which is slower growth compared with a 15% global rise in spending during last year's second quarter. Still, the company is performing fairly well in Europe, where credit card spending increased 5% in April and May.

The Dow's biggest gainer today turned out to be Johnson & Johnson (NYS: JNJ) . The company rose 2.17% on news that it will close its $19.7 billion acquisition of Synthes tomorrow. The move will allow J&J to expand further into the traumatology area and should have an immediate positive impact on the company and is projected to increase 2012 earnings per share by $0.03 to $0.05.

JPMorgan Chase (NYS: JPM) was the Dow's second biggest gainer on the day, rising 1.57%. CEO Jamie Dimon testified before the Senate Banking Committee today and was able to avoid any foot-in-the-mouth moments. Dimon admitted that he was "dead wrong" about dismissing early concerns over the company's $2 billion trading loss and said there will probably be clawbacks of executive pay after the loss announced last month.

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At the time thisarticle was published Brendan Byrnes owns no shares of any company mentioned above. The Motley Fool owns shares of JP Morgan Chase and Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson, creating a write covered strangle position in American Express, and creating a diagonal call position in Johnson & Johnson. The Motley Fool has adisclosure policy. 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.

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