Why the Dow Tanked This Week

The Dow Jones Industrial Average (INDEX: ^DJI) fell 2.6% to 11,866.39 this week.

The other two major indices fell even more -- the S&P 500 (INDEX: ^GSPC) was down 2.9%, and the Nasdaq (INDEX: ^IXIC) was down 3.5%.

This week didn't bring any huge macro bombshells. The Federal Reserve kept on keeping on regarding low short-term interest rates. Europe is still in a state of flux as it works to solve its debt crisis. The good stories were company-related and combined to tank the Dow.

A more granular view
While only two stocks were up more than 2% (Pfizer up 2.3% and Travelers up 2.2%), five Dow stocks were down more than 7%:


Weekly Stock Price Change

Caterpillar (NYS: CAT)


Bank of America (NYS: BAC)


Alcoa (NYS: AA)




Intel (NAS: INTC)


Source: S&P Capital IQ.

Caterpillar led the losers, as the market wasn't happy with its 2012 guidance of $63.8 billion to $69.6 billion in sales. Caterpillar did back its 2011 guidance, though.

Bank of America continued its woes as the big bank laggard, as both company-specific and European concerns jostled the stock. To make matters worse, B of A came in last among big banks on the American Customer Satisfaction Index, published by ACSI LLC.

Similar to banks, commodities tend to move on global concerns. Hence, Alcoa joins the doghouse.

HP saw its general counsel leave this week. Last week, it announced that it pretty much threw in the towel on its webOS mobile operating system software by announcing it will make it available as open-source code for developers.

Meanwhile, Intel was rocked by supply disruptions (specifically in hard drives) resulting from flooding in Thailand. The resulting lowered demand for Intel's chips forced the company to lower revenue expectations for the fourth quarter by about $1 billion.

Outside the Dow, Research In Motion delayed the release of its BlackBerry 10 operating system till late 2012 and otherwise continued to disappoint. On Friday, Facebook game creator Zynga closed the week on a low note, trading down 5% on its first day of post-IPO trading.

The bottom line
Remember that we're just looking at weekly movements here. It's fun to check in on the news, but at The Motley Fool, we recommend investing for the long term. These weekly price movements are just small blips in the bigger picture. Sometimes, they present opportunities, and sometimes they highlight dangers, but keep it all in perspective.

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At the time thisarticle was published Anand Chokkaveluowns shares of Bank of America and Pfizer and call options on Research In Motion. The Motley Fool owns shares of Intel and Bank of America and has bought calls on Intel.Motley Fool newsletter serviceshave recommended buying shares of Pfizer and Intel and creating a bull call spread position in Intel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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