China's Potential Impact on the Falling Dow Jones Industrial Average

In the world of finance, the Dow Jones Industrial Average (DJIA) has been a subject of interest lately, with China's economic moves impacting several key players.

Caterpillar, the market share leader in an industry where size matters, is facing uncertainty, particularly a potential China slowdown. This uncertainty could affect Caterpillar's future, given China's significant role in the company's operations. The construction equipment giant is leading all Dow laggards lower, down 2.3%.

Meanwhile, Alcoa, another Dow component, has lost more than 14% over the past year. China's moves are particularly poorly timed for Alcoa as it navigates the post-sequestration world. The company, which depends heavily on China for its revenue, could face serious revenue impacts due to China's economic slowdown.

On the other hand, the U.S. housing market's rebound has been a boon for Home Depot. The home improvement retailer has been a top pick for the Dow recently, gaining more than 45% over the past year. Home Depot got a boost early last week after reporting expectations that topped projections, with the rebuilding efforts after last year's Hurricane Sandy helping to drive sales. If housing continues to gain momentum, expect Home Depot to keep on rising with it.

Wal-Mart, another Dow component, has been dealing with its own challenges. If consumer spending remains subdued due to the payroll tax hike, Wal-Mart could face more trouble. The retail giant's leadership has expressed concern over the "total disaster" of February sales. However, Wal-Mart and Home Depot are keeping the Dow from succumbing to the industrial sector's pain, with shares gaining 1.4% and 1.2%, respectively.

The Chinese government's plan to curb swelling housing prices could also impact companies like Alcoa and leading steelmaking companies. The largest customers of China for raw materials, who could be affected by a decline in China's demand, include major mining companies like Rio Tinto, which depends on China for about 60% of its total revenue, making it vulnerable to economic slowdowns in China. Other significant players in raw materials and fertilizers include BASF, Evonik, Sumitomo Corporation, Lanxess, Domo Chemicals, Arkema, Novus International, and ArcelorMittal, all engaged in industries sensitive to shifts in Chinese demand.

In the midst of this, The Motley Fool recommends Home Depot. The article "Why China's Weighing Down the Dow" originally appeared on Fool.com. It's important to note that Fool contributor Dan Carroll has no position in any stocks mentioned.

For those interested in learning more about Caterpillar's strengths and weaknesses, a brand-new report is available. It's always a good idea to do thorough research before making investment decisions.