Friday, June 14, 2013

Unexpected Economic Data Send Markets Falling

A drop in the Thomson Reuters/University of Michigan consumer sentiment index and a surprisingly high Producer Price Index led investors to sell-off stocks, causing the markets to fall lower to end the week. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) ended the day down 105 points, or 0.7%, and now sits at 15,070. The S&P 500 shed 0.59%, and the Nasdaq was cut lower by 0.63% today.

The consumer sentiment index fell to 82.7, from a nearly six-year high of 84.5 in May, while the PPI rose 0.5% in May, which came in much higher than the 0.1% to 0.2% that most economists had expected. The bulk of the increase to the PPI came from higher food and energy prices during the month of May, and because the PPI fell the previous two months, the year-over-year increase to the index is only at 1.7%, which implies that inflation is still in check. For more about the PPI, click here. 

When the Dow falls more than 100 points, it's usually easy to find a few losers. This morning, I talked about why American Express, Du Pont, and Caterpillar were all lower; click here to read about those stocks, or continue reading to learn about JPMorgan Chase (NYSE: JPM  ) , AT&T (NYSE: T  ) , and IBM (NYSE: IBM  ) .

Shares of JPMorgan fell 1.92% today after the company announced it would spin-off its private-equity business known as One Equity Partners. The unit currently manages more than $4 billion for the bank, but under the direction of the top brass at the bank, the company has slowly been reducing its exposure to the private equity world for a number of years. In the long run, this should be a good move, as it will lower the bank's exposure to risk, but it may show up negatively in a few quarterly reports as revenue and profit may be lower. 

Shares of AT&T fell lower by 1.07% this afternoon, despite its closest competitor Verizon (NYSE: VZ  ) moving higher by 0.39% on news that should be seen as great for both companies. President Obama asked federal agencies to look for ways to increase the amount of wireless spectrum which would be available for private companies. This should help open new spectrum up for the two wireless giants as they grow their own networks and expand their offerings and broadband speeds. 

Lastly, shares of IBM closed lower by 0.77% today, after reports broke late yesterday that the company had fired 1,300 employees. The cuts came in the marketing department, the semiconductor research and development unit, and range from executives to rank-and-file workers. The cuts are likely a part of a global restructuring of the company, which IBM announced after it reported poor quarterly results back in April. 

More foolish insight

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, check out The Motley Fool's premium research report on the company. Click here now for instant access!

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