Markets Can't Shake the Bears
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Last week was the worst of 2013 for the Dow Jones Industrial Average , which lost 2.23%. Over the past year, after a big pullback, investors have quickly moved in and bought on the dip. But after a decline of 1.48% two weeks ago and last week's fall, it seems the buyers are no longer buying.
The blue-chip index declined again today by 70 points, or 0.47%, and now sits at 15,010, while the S&P 500 lost 0.59% and the Nasdaq slid 0.38%.
The recent falls make it rather evident that the bears have a solid grip on the market and aren't going to let go as easily as they have in the past. On the Dow, 24 of the 30 components ended the day in the red, with more than 12 falling more than 1%.
Let's look at a few of those big losers.
Shares of Microsoft lost 1.28% today after the announcement that the Nook e-reader -- which Microsoft took a stake in back in April 2012 -- was getting a price cut, as the device has failed to become a big hit with consumers. The company invested $300 million in the Nook for a 17.6% stake in the business. One analyst said consumers hear that Nook creator Barnes & Noble is struggling, and that turns them off from buying a device with an uncertain future. If Barnes & Noble ever goes under, nobody wants to be stuck with an expensive paperweight. Some observers have suggested that Microsoft or someone else should buy the Nook unit outright to give it the backing it needs. But that wouldn't guarantee a sales increase, and it could ultimately cost Microsoft shareholders billions of dollars.
Hewlett-Packard was another big loser today, as shares fell 2.04%. HP is scheduled to report earnings on Wednesday, and after the dismal results Dell recently posted, investors may be getting concerned. Analysts expected the company to report earnings per share of $0.87 on revenue of $27.29 billion. Shares have climbed 81% this year, and if HP comes up light on either mark, they'll probably take a massive dive. But the important thing to watch is how the turnaround plan is going from Meg Whitman's perspective. She's given herself five years to complete her goals, and at the year-and-a-half mark, she says HP is ahead of schedule. Let the fools worry about tomorrow or next week, while we Fools who are serious about making money worry about the next few years.
Finally, shares of ExxonMobil slid 1.13% after an analyst at Oppenheimer reported that the oil giant's share-repurchase program may continue to decline in the coming years. The firm does, however, believe that Exxon will continue growing its dividend in the future. While some investors prefer dividends over share buybacks and others the opposite, the way I see it is that it should be more about timing. A well-timed buyback will add more value for shareholders over the long run than a one-time dividend or even a slightly higher quarterly increase. But enacting buybacks when stock prices are high hurts value, and the money would have been better spent giving it to investors as a dividend. So investors shouldn't see today's news today as a bad thing, as long as the dividend does get bumped higher as the buyback program falls.
More Foolish insight
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 -- per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model that he just loaded up on 2.19 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click here to uncover the name of this industry-leading stock, and join Buffett in his quest for a veritable landslide of profits!
The article Markets Can't Shake the Bears originally appeared on Fool.com.
Fool contributor Matt Thalman owns shares of Microsoft. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter, @mthalman5513. The Motley Fool owns shares of Microsoft. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.