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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!