U.S. and global economic worries had the Dow Jones Industrial Average off more than 475 points, plunging lower more than 4% from the opening bell to below 10,933. German industrials were off, sending markets around the globe in a downward spiral, led by financials and industrials. It’s becoming more apparent to investors that growth strategies to date have not worked, despite earnings for the second quarter of 2011 increasing by a record percentage. For the year, the Dow Jones Industrial Average is down more than 5.2%. Not a single Dow stock was up in mid-morning trading.
Crashing by more than 7.25% down at the opening was Bank of America (NYSE:BAC), losing more than 55 cents per share to under $6.85. The PR offensive of Bank of America has not gone well. Claims that it did not have to raise capital have been contradicted by sales of real estate assets and credit card operations. The recent disclosure that John Paulson was reducing his holdings also increased the downward pressure, along with news this morning that Bank of America could be liable for another $9 billion in mortgage costs in a lawsuit. The beta for Bank of America is now 2.23, with the overall market at a 1.
With the whole financial sector down for the day and for the year, JP Morgan (NYSE:JPM) was off around 5%, more than $1.80, to beneath $34.75. JP Morgan has mortgage woes bedeviling it from its Washington Mutual acquisition in 2008. The financial sector is the worst-performing segment of the Dow in 2011, and JP Morgan is down more than 16% for the quarter.
Concerns about demand for its heavy equipment falling because of slower global economic growth was plowing under Caterpillar (NYSE:CAT), which was down more than $5.50 per share to trade below $82, shedding more than 6%. Caterpillar filed its 8K this morning, which did nothing to restore investor confidence. The Big Cat is down more than 20% for the month and has a beta of 1.72.
The tech sector also was in full flight, with Microsoft (NASDAQ:MSFT) down by more than a dollar, about 4%, to around $24 per share. Microsoft is up for the week and the quarter with favorable research out this morning, but the rout in the Dow is a “Full Monty.” Even Microsoft now has a beta above 1.
Boeing (NYSE:BA) crash-landed at the opening, descending by more than $4 per share to under $58.50, losing more than 6%. Boeing is facing competition from foreign aircraft makers, which are threatening its lock on domestic sales in the U.S. The debt ceiling agreement will force massive cuts in Pentagon spending, which also will harm Boeing. A global recession will further cut demand for its airplanes. Boeing is now down about 20% for the quarter.
Big Oil was also being pumped lower on growth fears, with Chevron (NYSE:CVX) off about $5, down more than 5% to under $92.80. Chevron is up more than 8% for the week and has been upgraded twice in August.
Jonathan Yates does not own any of the stocks mentioned in this article.
