Why These Dow Stocks Missed Out Today
Stocks continued their amazing 2012 run, with gains from pretty much every broad measure of the stock market. Gold bounced back from its big drop yesterday, and bonds held their own after seeing a big rise in yields over the past several days. As for the Dow Jones Industrials (INDEX: ^DJI) , the average closed up 59 points to 13,253, setting another multiyear record and extending its string of gains to seven straight trading days.
But not every Dow stock moved higher today. Let's look at three of the laggards.
With all the attention in the tech world seemingly on Apple this week, Cisco decided to jump into the ring with a big acquisition. The networking giant announced it would buy satellite- and cable-box software company NDS for $5 billion.
The move extends Cisco's foray into video, which is an important component of its growth strategy going forward. Combined with previous buyouts of Scientific Atlanta, WebEx, and Tandberg, Cisco has been far more willing to make high-priced acquisitions than have Apple and many of its tech peers.
Oil prices are still comfortably high, but Chevron is facing another problem in Brazil. After a small leak last November that prompted a controversial call for billions in fines, Chevron has now asked to suspend production in Brazil's Campos Basin following reports of further seepage near the site of the previous spill.
Obviously, the last thing Chevron needs is another $11 billion civil suit. But longer-term, investors have to be concerned with Chevron's care working with Brazil. Given the size of the country's reserves, stepping on toes in the Latin American nation would be a huge mistake.
Merck fell on a generally down day for pharma stocks. But what investors may be most upset about is an opportunity that Merck didn't take advantage of.
Five years ago, Merck sold biotech Okairos to a group of venture-capital funds. But Okairos recently said that it's now looking to produce what would be the first preventive vaccine for hepatitis C. Given the nearly $11 billion that Gilead Sciences (NAS: GILD) spent on a simple treatment for the disease, a full-blown vaccine could be a blockbuster -- not to mention a huge threat to Gilead and the rest of the hep-C space, which includes Merck. Unfortunately, that blockbuster vaccine now won't be in Merck's pipeline.
Don't give up
The fact that a stock drops on one day doesn't mean it's not a smart long-term bet. For more smart investment ideas, be sure to check out the Motley Fool's latest special report on retirement, which highlights three promising stock picks for retirement investors. Don't wait -- get your free report today while it's still available.
At the time this article was published Fool contributorDan Caplingerdoesn't own shares of any companies mentioned. You can follow him on Twitterhere. The Motley Fool owns shares of Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Chevron and Gilead Sciences. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool has adisclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.