Guess What's Driving the Dow Down Again


A huge amount of important economic news from around the world makes it tough to decipher exactly what might be responsible for the stock market's movements this morning, but that in itself shows just how big an impact uncertainty has had in driving the market downward from recent record highs. Overnight, the Japanese stock market plunged once again, falling 4% as comments from Prime Minister Shinzo Abe failed to have as strong an effect as some investors had hoped. Mixed data in the U.S. showed weaker-than-expected job growth and factory orders, stronger-than-expected service-sector activity, and favorable trends in labor costs and productivity, failing to answer any questions and leaving investors once again speculating about whether the Fed will taper off its bond-buying in the near future. The net effect was a loss for the Dow Jones Industrial Average , which is down 96 points, or 0.63%, as of 10:45 a.m. EDT, while the broader market has lost a similar amount in percentage terms.

Among the morning's worst decliners was Alcoa , which has fallen 1.6%. News that two companies in Dubai and Abu Dhabi will merge into a $15 billion joint venture reflects the need throughout the aluminum industry to cut costs and find potential synergies, and Alcoa has been making its own efforts to take advantage of opportunities among the weaker players in the industry. Nevertheless, with the joint venture expected to increase output, it could lead to extended periods of low prices, further hurting Alcoa's long-run prospects.

Disney has also given up ground, falling 1.9% to give back some of its gains from earlier in the week. The company's theme-park ticket price increase over the weekend drew the usual negative responses from customers who already consider the costs of admission to be exorbitant, but it's unlikely that they'll result in substantially lower demand for tickets. Those who sell off the stock even at its current levels, near all-time highs, could miss out on the huge growth opportunities presented by future blockbuster movies from the Marvel and Lucasfilm segments, as well as the potential in television and other content deals.

Finally, beyond the Dow, Chinese solar stock JA Solar has dropped 9.1% following an analyst downgrade. Despite soaring sales during the past quarter, with particularly strong growth in the Japanese market, JA Solar still isn't close to making money and has to rely on the potential for module prices to rise once some of its Chinese competitors drop out of the picture. Funding sources continue to provide financing to many struggling Chinese solar companies, and this forestalling of the day of reckoning is bad for companies like JA Solar that would benefit the most from a shakeout.

Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Controlling about 15% of global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant, simply click here now to get started.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. 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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