Negative News Has the Dow Heading Lower Today
Not that it's any secret, but the state of the global economy isn't exactly rosy these days. But only a day after the Fed concluded its monetary policy meetings with noteworthy lack of further quantitative easing, another spate of negative data has painted the U.S. recovery a growing weaker by the day. U.S. stocks markets don't like it, either.
Coming into midday, the Dow Jones Industrial Average (INDEX: ^DJI) finds itself trading 0.7% lower. Probably unsurprisingly, both the Nasdaq and S&P 500 slumped 1.2% and 1%, respectively, as well. The market's "fear gauge," or the VIX (INDEX: ^VIX) , gained 6.6% as well halfway through today's trading session.
The devil's in the details
As mentioned above, today's bad news came from stateside. News from the Federal Reserve Bank of Philadelphia showed manufacturing activity in its region (basically the mid-Atlantic) declined. The news came after a similar survey showed manufacturing also dwindled in the New York area. Additionally, May used-home sales figures also declined. Individually, these figures carry little weight. However, taken as a whole, they paint U.S. recovery as increasingly tepid, which of course has investors concerned, as growth prospects have also soured in China and Europe.
As should be expected, the bad news sent cyclical stocks sharply downward. Shares of aluminum producer Alcoa (NYS: AA) dropped 2.7%. After rallying strongly to start the year, Alcoa's stock has fallen more than 13% in the last three months. The negative economic outlook has oil and oil-related stocks retreating. Currently oil finds itself down 1.6% around noontime. At present, Chevron (NYS: CVX) and ExxonMobil (NYS: XOM) sit 1.3% and 1.8% lower, respectively. However, these large-cap Dow components have fared better than their respective sectors, which are the two worst-performing market sectors today; both the broader basic materials sector and energy sector have each dropped 2.2% today. Ouch.
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