Sunday, April 20, 2014

Markets Fight Back to Positive Territory Today

This afternoon, I noted that during the past few months, we have seen a number of losing days -- but they have always been followed by a winning session as investors move in and have bought on the dips. A little before 1 p.m. EDT today, that didn't seem to be the case, as all the major indexes were in the red. But, as the day progressed, the bulls came back, and the markets moved into positive territory.

When the closing bell finally rang, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up 41 points, or 0.28%, and sat at 14,799. The 41-point change did break an eight-session streak in which the index moved higher or lower by more than 100 points. The S&P 500 (SNPINDEX: ^GSPC  ) also ended the day higher, up 0.27%, but the Nasdaq couldn't make it into the black, as it lost 0.22% during the day.

This morning, when the Dow was down by as much as 69 points, there were a number of its components in the red, but at 4 p.m. EDT on Wall Street, only 11 remained down for the session. Let's take a look at three of today's losers.

Shares of JPMorgan Chase (NYSE: JPM  ) declined by 0.99% today on very little news pertaining directly to the company. But, interest rate risk, and a new scandal at fellow Dow banking stock Bank of America have provided investors enough fuel to cut the share price of JPMorgan today. As my colleague John Grgurich pointed out earlier today, although JPMorgan fell 3.31% this past week, the company is a great one to be invested in right now. The bank has a great balance sheet, and the fundamentals of the company are getting better and better as each quarter passes. 

Another Dow component that fell on news that doesn't directly pertain to the company, but could have serious long-term effects on its business, was Alcoa (NYSE: AA  ) . The aluminum producer fell 0.44% today on news that the Chinese government is tightening credit. The reason this will affect Alcoa is that the company needs strong economies where construction and large infrastructural projects are happening in order for it to sell its product, aluminum. If credit tightens in China, large projects and development will likely slow, and ultimately hurt the company's top and bottom lines. 

Another Dow stock that likely fell on the news from China was Caterpillar (NYSE: CAT  ) , which ended the day down 0.1%. Although today's announcement clearly didn't have a major affect on either caterpillar or Alcoa, it did add fuel to the bearish sentiment investors have had with each company this year. Caterpillar is down 7.24% year to date, while Alcoa has lost 8.06%. These may not seem like massive declines, but when we add in the fact that the Dow itself is up 12.94% in 2013, the idea that Alcoa and Caterpillar have been beaten by nearly 20% over just the past six months is rather shocking.

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