What's Depressing the Dow?


After a tumultuous day of trading yesterday, the Dow Jones Industrial Average (INDEX: ^DJI) has confined itself to a much more muted range thus far today. At two hours into the session, the blue chip index is down 65 points, or 0.48%.

What's moving the Dow?
Four events are weighing on traders' minds. First, the Reserve Bank of Australia surprised markets this morning by announcing its decision to lower interest rates by a quarter of a percent for the first time since June. The move comes amid a wave of similar actions in other countries. Last month, analogous policies were implemented or expanded upon by central bankers in Europe, the United States, Japan, and China.

In the press release announcing the move, the Governor of the RBA noted:

The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside. Economic activity in Europe is contracting, while growth in the United States remains modest. Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.

Second, a report from Reuters late last night claimed that Spain will soon request a bailout from European authorities. If true, the move would trigger Spanish bond buying by the European Central Bank, which would lower Spain's borrowing costs and at least temporarily ease concerns about the country's fiscal health.

Third, domestic car manufacturers released sales figures today for the month of September. Shares of General Motors (NYSE: GM) are up 1.1% in intraday trading after the company reported a 1.5% year-over-year increase in auto sales last month. Also fueling its gains, hedge fund manager David Einhorn, speaking at the Value Investing Congress this morning, said the company is much healthier now and is positioned to beat growth forecasts.

Shares in Ford (NYSE: F) , meanwhile, are down 1.7% after the nation's second-largest car manufacturer reported a slight decrease in sales. For the month of September, the company sold 174,976 vehicles this year compared to 175,199 in the same month a year ago.

Finally, it was reported this morning that the New York Attorney General has sued JPMorgan Chase (NYSE: JPM) , the nation's largest bank by assets. As my colleague Dan Caplinger noted, the suit alleges that the lending giant's Bear Stearns division, which JPMorgan acquired during the financial crisis, defrauded purchasers of its mortgage-backed securities. The suit is similar to ones that have cost Bank of America (NYSE: BAC) billions of dollars in settlement fees and litigation expenses.

Foolish bottom line
Markets remain jittery on the back of weak manufacturing results last month, the continued slowdown in China, and Europe's ongoing struggles. So it's a good time to keep a close eye on companies you're interested in. If you're considering investing in the automakers mentioned above, check out our new premium report on Ford, which details the opportunities and risks facing the company, and how they might affect you as a stockholder. Click here to get access to the report as well as a full year of updates on the stock.