Why IBM's Leading the Dow Downward This Morning

The stock market has definitely taken investors on a roller-coaster ride over the past few weeks, as uncertainties about the basic fundamental health of the economy and the role of central banks in stabilizing and fostering economic growth continue to linger. With various officials at the Federal Reserve taking slightly different positions in interpreting the central bank's recent actions and statements, investors have gotten whipsawed, and today, fears of a near-term reduction in the amount of bond-buying the Fed will do in the near future helped send stocks down. As of 10:45 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI  ) were down 92 points after having fallen triple-digits earlier in the morning.

The Dow suffered greater losses than the overall market largely because of the influence of IBM (NYSE: IBM  ) , which fell 2.6%. Rival Accenture (NYSE: ACN  ) , which is the major competitor against IBM in the lucrative information-technology consulting business, gave reduced guidance for full-year results when it reported earnings last night. Pointing to weakness in its consulting business, Accenture cut the midpoint of its earnings forecast range by about 2% and pushed down its expected range for revenue growth to just 3% to 4%. Accenture fell 13% on the news, but investors concluded that prospects for the entire industry were weak and therefore bid IBM down in sympathy. Since IBM's share price is by far the largest in the Dow, the loss had a big overall impact on the entire average.

Merck (NYSE: MRK  ) and Johnson & Johnson (NYSE: JNJ  ) also declined in early trade, with Merck down about 1% and J&J falling three-quarters of a percent on news that two biosimilar versions of the two companies' Remicade rheumatoid arthritis drug had gained recommendations from experts at the European Medicines Agency. Biosimilars have the potential to pose an equal threat to Remicade and other biologic treatments that generics have on traditional pharmaceuticals, but the biosimilar versions could still face challenges in getting widespread adoption. With both companies having rights to market the drug in various regions of the world, Merck and J&J both have an interest in keeping biosimilars out of the market.

Finally, outside the Dow, gold prices once again fell, dropping below the $1,200 per ounce level. Yet once again, gold-mining stocks rose, with the Market Vectors Gold Miners ETF rising nearly 5%. This disconnect isn't sustainable, but it shows the extent to which mining stocks got sold off -- to an even greater extent than bullion during gold's pullback over the past couple of years.

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