Why the Dow Turned Lower This Morning


Yesterday's Federal Reserve announcement and news conference turned out to be largely a non-event, especially for those looking for innovative proposals to jump-start a flagging economy. After trying to rebound from yesterday's losses, the stock market this morning gave up its gains and turned lower, as a host of news appeared to confirm worries about economic growth around the world. Although Spain managed to get some much-needed sovereign debt auctioned off, weakness in the manufacturing sectors in both China and Germany appear troubling. By 10:45 a.m. EDT, the Dow Jones Industrials (INDEX: ^DJI) were down 14 points to 12,810 after having fallen as much as 40 points earlier in the day.

Merck (NYS: MRK) rose more than 1% after reports from Indian news sources that the company may be looking to buy privately held Micro Labs, an Indian company that makes pharmaceutical ingredients. With the future of health care in the U.S. uncertain, Merck and its peers are increasingly looking to emerging markets like India for potential growth opportunities. It's unlikely, though, that an acquisition this small would have this large an impact on Merck.

Alcoa (NYS: AA) , on the other hand, fell almost 2%. Clearly, weakness in the manufacturing sector strikes near the core of Alcoa's business. Investors are also getting impatient with the aluminum maker, with a lawsuit coming earlier this week from a shareholder who said that the company didn't adequately look into bribery allegations. For Alcoa to start performing well, it badly needs signs of global economic weakness to go away.

Finally, Chevron (NYS: CVX) and ExxonMobil (NYS: XOM) were both lower as oil continued its recent plunge. Crude is now approaching the $80-per-barrel level, as investors fear a loss of demand if industrial activity truly does begin to slow. The declines in both stocks have been less severe than crude's moves, however, suggesting at least some belief that oil could rebound in the near future.

Don't let the Dow get you down
If you can't deal with the endless turbulence of the Dow's daily movements, don't worry -- you don't have to. Take a longer-term approach instead. You'll find three good long-term prospects in the Fool's brand-new special report, where you'll discover the names of the three Dow stocks dividend investors need. It's absolutely free, so just click here and get your copy today.

The article Why the Dow Turned Lower This Morning originally appeared on Fool.com.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. Motley Fool newsletter services have recommended buying shares of Chevron. 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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.