Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why the Dow (.DJI) Has Plunged More Than 100 Points: Bank of America Corp (BAC), JPMorgan Chase & Co. (JPM)

Forget about yesterday’s great gains. The markets are embracing the red today, and as of 2:30 p.m. EDT the Dow Jones Industrial Average has plunged 102 points, or 0.7%, easily giving up everything it gained yesterday. Most stocks on the blue-chip index are in the red, with several recording significant losses. Today’s drop doesn’t owe to recent events so much as it owes to what investors are feeling. Let’s catch up on why the market’s so far in the red.

Bank of America Corp (NYSE:BAC)

Investors catch a case of the jitters
The bad news started early as payroll-processing company ADP reported that private-sector hiring dried up last month. The addition of 158,000 jobs added last month was far short of expectations for nearly 200,000 and fell significantly from February’s hiring pace. The decline in private-sector hiring isn’t likely responsible for all of today’s market drop, however. With the record highs the markets have been hitting, cautious investors wary of a pullback are much more likely to react negatively to news such as this — and thus create opportunities for investors looking for a dip in their favorite stocks.

That caution is evidenced by today’s 9%-plus jump in the market’s CBOE Volatility Index (VOLATILITYINDICES:^VIX), or VIX — the measure of fear in the markets. So long as the markets remain at these highs despite the economy’s sluggish growth, expect more volatile days like this from both the Vix and the major indexes.

On the stock front, a few picks are making the most of a bad day. The Boeing Company (NYSE:BA) shares are up 0.7% to rank among the few winners on the Dow. Japanese carrier All Nippon Airways is reportedly sending its pilots back into flight simulator training for Boeing’s grounded 787 Dreamliner aircraft after The Boeing Company (NYSE:BA) finished more than half of the necessary tests on its new battery fix. The resumption of training is a vote of confidence that the company will have the 787 ready to fly again in the near future — something investors have been patiently waiting for.

Unfortunately, most stocks aren’t gaining ground today. Big banks are leading the charge into the red: Bank of America Corp (NYSE:BAC) has lost 3.5%, and JPMorgan Chase & Co. (NYSE:JPM) is down 2.8%. Bank stocks have done well over the course of the recovery, but today’s investor pullback is hitting the financial sector harder than the rest today.

Although there’s no news important enough to justify today’s drop, it’s natural to expect jittery investors to retreat from this sector on negative economic news. Still, over the long term, the recovery should benefit stocks like Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM): While dips are expected, these two stocks have rewarded investors handsomely recently.

The article Why the Dow Has Plunged More Than 100 Points originally appeared on Fool.com and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America and JPMorgan Chase & Co (NYSE:JPM).

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

Loading Comments...