Last Week's Dow Losers


Another wild week on Wall Street leaves investors basically were they were five days ago. After falling more than 129 points on Monday, and then rising 99 points on Tuesday, the Dow Jones Industrial Average finished the week down 16.82 points, or 0.12%, and now sits at 13,992. On Wednesday the index closed higher by 7 points, followed by a 42-point drop on Thursday, and a 48-point rally to end the week on Friday.

Although the Dow was down, the other two major U.S. indexes had a winning week, as the S&P 500 moved higher by 0.31%, or 4.76 points, and the Nasdaq gained 14 points, or 0.46%. Seventeen of the Dow's 30 components ended the week in the red.

The big winner
Before I get to the Dow losers, let's look at the week's biggest winner from the index: UnitedHealth, which gained 3.53%. On Tuesday, Goldman Sachs upgraded the stock from a "neutral" to a "buy" increased the price target from $57 per share to $66, citing a solid outlook for 2013 and a belief that earnings will show healthy growth in 2014. UnitedHealth's stock popped 3.62% on the news.

The big losers
Shares of IBM fell by 1.7% this week, after the company said it will soon offer a lower-priced server line. The new servers, which will be priced below $6,000, are intended to help the company target medium to small businesses -- an area in which Hewlett-Packard and Oracle have had success over the past few years. While this move may open new doors, though, it may also ultimately hurt the IBM brand and profit margins, if users trade down from the company's higher-priced servers to the more affordable units.

Shares of Caterpillar dropped by 2.65% this past week, including a 0.75% drop on Wednesday. After announcing its most recent quarterly results, the company said the beginning of 2013 will be tough but promised that the second of the year will get better. Earnings-per-share guidance of $7.00-$9.00 didn't help matters. With such a wide range, investors and analysts are starting to think the company has no idea what earnings will look like this year. In the short term, EPS are expected to fall by 4.4%, and over the past 30 days, the Zacks analysts' consensus shows that per-share earnings estimates have dropped from $8.69 to $8.25 in 2013.

For the second week in a row, ExxonMobil made the list of the Dow's worst-performing stocks. After a price decline of 1.84% two weeks ago, shares fell another 1.58% this past week -- and in both cases, news from Iraq had a lot to do with it. Two weeks ago, it was announced that Exxon will no longer be able to work with both the southern part of Iraq, controlled by Baghdad, and the northern region, under Kurdish rule. The clashing factions are fighting over the country's oil supply in an attempt for greater political control, and even though Exxon currently has contracts for oil fields in both regions, it will have to give up operating in one area if a compromise doesn't come about.

This week, the government did propose a bill that would unify Iraqi oil operations and therefore would have allowed Exxon to continue operating in both regions. But the opposing sides quickly shut down any chance of the bill's success, and Exxon shares fell 1.5% on the news.

While last week's biggest loser, Merck managed to perform slightly better this week and lose the least-coveted title, it did still end the week lower than were it began. Shares dropped 0.48% after the company lost a lawsuit and was ordered to pay $285,000 to the plaintiff, as a federal court found that Merck had failed to warn doctors that a drug called Fosamax had possible side effects. While this penalty is small when compared with Merck's overall position, there are more than 4,000 similar pending lawsuits that could pose a real threat to the company's overall health.

Finally, we come to this week's biggest Dow loser: Pfizer , whose shares fell 2.71% over the past five trading days. Last week, Pfizer was flirting with its 52-week high, but as investor fears of a correction grow stronger, companies trading close to their yearly highs are likely to experience a selloff as investors lock in their gains. This past week was actually relatively quiet for the company, other than the announcement that the FDA chose a competitor's drug for an Alzheimer's study. The big drug manufacturers will probably find themselves fighting uphill battles for the next few years as a number of blockbuster drugs fall off patent and the generic manufacturers begin eating market share.

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Fool contributor Matt Thalman has no position in any stocks mentioned. Follow Matt on Twitter: @mthalman5513. The Motley Fool owns shares of IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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