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The Dow Now: Downgrade Worries Hurting Alcoa, General Electric, and American Express


Caterpillar and United Technologies were among gainers of the day.

MINYANVILLE ORIGINAL US stocks made small gains in early Wednesday trading but slipped into the red by midday as investors continued to await further developments in the fiscal cliff negotiations in Washington.

"We're starting to lead with an assumption of some type of deal being done since both sides erased their lines in the sand," Art Hogan, market strategist at Lazard Capital Markets, told MarketWatch.

The Dow Jones Industrial Average (INDEXDJX:.DJI) was down 0.20% to 13,323.70 points as of 12:06 p.m. EST.

Alcoa (NYSE:AA) was the biggest loser on the day, falling 2.92% to $8.65 after Moody's Investor Service warned that it may lower the company's credit ratings from its current "Baa3" level because of an almost 22% plunge in aluminum prices over the last year. A downgrade would put Moody's credit in "junk bond" territory, which could mean a sharp increase in future borrowing costs.

"Europe's recession and sovereign-debt crisis, sluggish performance in the US economy, and slower growth in China are expected to continue to adversely impact the aluminum industry," Moody's said, according to Reuters. "We do not see a material, sustainable improvement in aluminum prices over the next several quarters and expect Alcoa's earnings performance and debt protection metrics to remain challenged."

General Electric (NYSE:GE) also dropped2.63% to $21.12 after UBS downgraded the company and struck it company off its "key call" list, citing strong possibilities that GE's near-term earnings will be poor because of the uncertain global macro environment.

American Express (NYSE:AXP) similarly dipped 1.09% to $57.19 on a downgrade to Equal Weight from Overweight by Evercore. Credit companies Capital One Financial (NYSE:COF) (-0.38%), Discover Financial (NYSE:DFS) (-1.09%), Mastercard (NYSE:MA) (-0.23%), and Visa (NYSE:V) (-0.59%) were all down on the day as well.

United Technologies (NYSE:UTX) inched up 1.02% to $83.07. The company, which receives many government contracts, would have been badly hurt by automatic cuts to government spending, so any fiscal cliff optimism is always welcomed by investors.

Caterpillar (NYSE:CAT), looking to climb for a ninth session in a row, was up 0.90% to $91.59.

Twitter: @sterlingwong
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