2 Key Reasons Why the Dow Fell Today


The Dow Jones Industrials closed down 90 points today, as the stock market pulled back after yesterday's rise, and brought the average back to within spitting distance of yet another all-time record high. The Dow actually held up better than the broader market, as both the S&P 500 large-cap benchmark, and the Russell 2000 index of small-cap stocks, did worse than the Dow on a percentage basis. International stocks also fell.

Here's a look at the two main themes that played out in the stock market today:

Banking stocks under siege
Both Bank of America and JPMorgan Chase fell more than 1.5% today, as the financial sector faces a number of uncertainties. The Cypriot banking crisis has made headlines around the world because of the potential impact on ordinary bank depositors, with political pressure having led to revised bailout provisions that would protect insured deposits in full rather than imposing a tax of more than 6% on small depositors. Yet, with banks having greatly reduced their European exposure, the bigger problem could come from the LIBOR banking scandal, in which both JPMorgan and B of A have been alleged of wrongdoing. With the afterglow of the successful stress tests fading into the background, both banks will need to keep addressing structural issues in order for their stocks to rise further after strong recent gains.

A tech slowdown?
The other big losers in the Dow were all tech stocks, as Cisco, Hewlett-Packard , and IBM were all among the worst five performers in the average today. For HP, news that the company's board of directors survived its shareholder meeting intact didn't lead to investor optimism, as all three tech giants have had to deal with fallout from rival Oracle's poor results last night. Moreover, IBM and HP were among companies potentially connected to a bribery investigation in Poland.

Among these stocks, IBM looks best poised to rebound. This morning, it announced that it won a contract from the Ohio state government to improve its information-technology infrastructure, giving investors evidence of the success of its strategy to provide all-inclusive high-margin IT services to customers much in need of newer technology. With all the recent advances in technology, it's clear that overall spending in the area will keep growing. The only question is, which companies will profit and which will be left behind? IBM has done the best job of keeping up with changing trends.

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The article 2 Key Reasons Why the Dow Fell Today originally appeared on Fool.com.

Fool contributor Dan Caplinger owns warrants on Bank of America and JPMorgan Chase. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of Bank of America, IBM, JPMorgan Chase, and Oracle.. 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 Motley Fool has a disclosure policy.

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