Dow Jones Industrial Average (.DJI), Alcoa Inc (AA): Poor GDP Number Could Mean More Days of Free Money

The big news on Wall Street today is that the Department of Commerce’s final reading of first-quarter GDP was released, and it was revised downward from 2.4% to 1.8%, the markets are moving higher. As of 12:45 p.m. EDT the Dow Jones Industrial Average (INDEXDJX:.DJI) is up 107 points, or 0.73%, while the S&P 500 (INDEXSP:.INX) and the NASDAQ Composite (INDEXNASDAQ:.IXIC) have risen by 0.75% and 0.76%, respectively. Every component of the GDP report was lowered from the previous estimate except housing and government spending, which is not a good sign.

Dow Jones Industrial Average 2 Minute (INDEXDJX:^DJI)

But I believe the markets may be celebrating this because investors see the lower-than-expected GDP number as a reason for the Federal Reserve to continue stimulating the economy for longer than they had previously expected. Ben Bernanke made it clear last week that he would begin slowing the central bank’s bond-buying program if the economy kept moving down its current path. However, today’s report clearly shows that the U.S. economy is not as strong as we had previously been told, so the free-money policies may last longer than even the Fed’s chairman told us it would.

While the broader market is partying, let’s look at a few stocks on America’s premier blue-chip index whose invitations got lost in the mail.

A few Dow Jones Industrial Average (INDEXDJX:.DJI) losers
Shares of Alcoa Inc (NYSE:AA) rank at the bottom of the Dow Jones Industrial Average (INDEXDJX:.DJI) today, down 1.8%. Fool contributor Caroline Bennett recently pointed out three reasons to stay away from the aluminum giant despite its market-leading status. With that said, China’s government has recently cracked down on easy money and credit, which have caused bubbles in the country. Reports also indicate that the new government will address the oversupply of steel and other metals in the country by shutting down some of the mills that have sprouted up like weeds all over the nation. If the Chinese government slows its own country’s production rates, that should help Alcoa Inc (NYSE:AA) as the price of aluminum stabilizes.

Other commodity-driven Dow Jones Industrial Average (INDEXDJX:.DJI) stocks are also declining today. Shares of Caterpillar Inc. (NYSE:CAT) have fallen 0.3% as the prices of gold, silver, copper, and platinum drop. The company needs metals prices to perform well so that emerging markets, which are big commodity-producers, will continue to buy earth-moving equipment and machinery.

Both Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) are down slightly today, having lost 0.1% and 0.3%, respectively.

As with Alcoa Inc (NYSE:AA), the price of the oil supermajors’ main commodity is slipping today. Light crude is down slightly, while unleaded gas has fallen 1%. Heating oil has even declined by nearly 1%, while the only major fuel source that has risen today is natural gas, up 0.66%. The lower-than-expected U.S. GDP number and the fear that China is slowing down are likely weighing on both the price of oil and the Dow Jones Industrial Average (INDEXDJX:.DJI)’s two major oil companies.

The article Poor GDP Number Could Mean More Days of Free Money originally appeared on Fool.com and is written by Matt Thalman.

Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends Chevron.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!