Last week was one of possibilities. The Dow Jones Industrial Average came within 16 points of its all-time high. But it seems that the start to this week may be a bit slower. With little economic news slated for the beginning of the week, investors have to look elsewhere for clues. Without much to fuel it forward, the Dow has fallen 40 points from Friday’s close, with drops as large as 58 points so far this morning.
Even though the Dow has receded slightly from last week, it could be a lot worse. With the spending cuts from the sequestration now in effect, it’s remarkable that Wall Street has barely flinched. Many believe that the sequestration has been overhyped and that the effects of the cuts will not be felt as dramatically as once believed.
Markets around the world are clinging to a fear surrounding China’s slowing growth trend. The country’s government has recently announced new home-ownership restrictions, which are intended to cool down its housing market. Luckily for the U.S. housing market, there is little overlap between the two countries that could affect the rebound we’ve been seeing in the past six months.
With little else helping the Dow, the 20 component stocks in the red this morning may be the ultimate determinants of how the index performs today. Caterpillar Inc. (NYSE:CAT) is leading the descent, down 1.65% so far today. The manufacturer is facing a potential worker’s strike in Wisconsin, where it is set to begin labor talks with the United Steelworkers union before the union’s contract expires at the end of next month. The company handled similar situations in Ontario and Illinois last year, and has begun training managerial and support staff for production if the workers do strike. In Belgium, Caterpillar is making plans to cut 1,400 jobs due to a weakened European economy and rising costs. Environmental restrictions have also increased production costs, which make it more economical for the company to import the machinery than manufacture it at the current plant.
Hewlett-Packard Company (NYSE:HPQ) is also in the red this morning, down 1.54% so far in trading. The tech company recently announced that it’s halfway through its layoff plan, which was detailed last year as 27,000 cuts over a two-year span. The remaining 15,000 job cuts will be completed by the end of next year through layoffs and early-retirement incentives. Hewlett-Packard Company (NYSE:HPQ) has also found itself in another battle of words with rival Dell. After CEO Meg Whitman told global resellers at the Global Partner Conference that Dell’s privatization will cause uncertainty with customers, Dell’s VP and GM of Global Channels, Greg Davis, had a few choice words for HP. He stated that Dell has met all of its obligations with global partners consistently for the past five years, while HP has “flip-flopped,” making resellers uncertain of their ability to invest in Hewlett-Packard Company (NYSE:HPQ) as a partner.
Alcoa Inc (NYSE:AA) is also seeing red this morning, with a 0.95% decrease in its price today. Though it was named one of the most admired companies on Fortune magazine’s “World’s Most Admired Companies” list, the company is slipping today. One reason may be its uninspiring dividend. For investors, the 1.4% yield and $0.03-per-share dividend is not to be admired. The company cut its payout four years ago and has since been making other use of its capital. And though its bets of fire-sale assets may pay dividends in the future, investors aren’t buying it now.