The Dow (INDEX: ^DJI) rose nearly 2% this week, as banks and tech reported strong earnings. But some stocks hardly budged at all:
Weekly Price Change
Johnson & Johnson (NYS: JNJ)
Verizon (NYS: VZ)
Pfizer (NYS: PFE)
Why were these the worst-performing Dow stocks this week?
Guessing what drives stock prices over the short term can oftentimes be a fool's errand. That being said, these three names are naturally insulated from the news that drove so many stocks higher.
Health care and, to a lesser-extent, utility-like services, are often considered to be a "defensive" sector to own when the economy is in rough shape, so it's only natural that more cyclical stocks like banks, commodities, and capital goods will outperform when investors are feeling more cheerful about the economy. Each also faced some less-than-stellar developments.
Johnson & Johnson and Wyeth lost a lawsuit this week to Abbott Labs and Medtronic. The price was two patents for heart devices in the latest in a long line of court battles over stent patents.
Verizon is engaging in court battle of its own against public-interest groups and telco rivals Sprint Nextel (NYS: S) and T-Mobile, which are urging the FCC to look into the details of Verizon's marketing agreements with cable providers in its review of Verizon's recent AWS wireless spectrum purchase. Verizon is also reporting its earnings results this coming Tuesday -- investors could be taking a wait-and-see approach as they wonder how many iPhone subscribers the telco added after the launch of the latest 4S device.
The major concern for Pfizer investors is less macroeconomic and more specific to the company's pipeline. This week saw Pfizer's pipeline efforts delayed again, as the company decided to stop development of an Alzheimer's drug after it showed poor late-stage test results.
The market's unpredictable over the short term, and stocks that are poor performers one week could be the following week's winners. It's important for us to remember to select winning stocks with a long-term perspective. If you're interested in one stock that our chief investment officer picked to crush the market in 2012, we have compiled a special free report for investors to uncover this stock today. Grab yours for free.
At the time thisarticle was published Ilan Moscovitzdoesn't own shares of any companies mentioned. The Motley Fool owns shares of Johnson & Johnson, Abbott Laboratories, and Medtronic.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson and Abbott Laboratories and creating a diagonal call position in Johnson & Johnson. 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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