Last Week's Worst Performing Dow Components
Put another wild week on Wall Street into the record books. Going into the last day of the week, the Dow Jones Industrial Average had an eight-day streak going in which it closed higher or lower by more than 100 points. But although the index was up nearly 100 points around 3 p.m. ET on Friday, it broke the streak and closed higher by a mere 41 points. But considering the Dow lost more than 550 points the two previous days, Friday was viewed as a big win, even though the index lost 270 points, or 1.79%, this past week over fears that the Federal Reserve's stimulus programs will soon come to an end. The other two major indexes also lost big time this past week, as the S&P 500 fell 2.1% and the Nasdaq lost 1.93%.
This past week was slightly unusual, as 27 of the Dow's 30 components ended the week in the red. On a typical week, or even in one where the market makes a big move lower, we tend to only see a little more than half of the components in the red. For example, last week the Dow fell 1.16%, but only 21 stocks were lower, and in the last week of May, it slid 1.22% and only 17 stocks fell.
Before we hit the Dow losers, let's look at this week's best-performing component. Shares of Cisco rose an astounding 0.53%. On Thursday, when its fellow components were tanking, it lost only 0.99% of its value, making it the best Dow performer that day. The company announced this week that it will purchase Composite Software for $180 million this past week. Composite makes software that takes data from multiple storage locations and presents it to a user in a way that makes it seem all the data came from the same place. This technology will help Cisco grow its cloud computing offerings in the future.
The big losers
Shares of AT&T fell more than any other Dow stock this past week, dropping 4.47%. The telecom giant slid on a few different news-related stories this week, including the Fed's announcement. The first mover came on Monday, when rumors began swirling that AT&T may be interested in purchasing Spanish telecom company Telefonica. The $93 billion price tag probably caused some shareholders to nearly faint, and then promptly sell their shares. The other big news came on Wednesday, when it was reported that DISH Network was officially pulling out of the race to buy Sprint Nextel. This move opens the door for SoftBank to move in and buy the company, which is bad for both AT&T and Verizon, since SoftBank will be able to provide adequate capital to Sprint, which it will probably use to update its network and fight to win market share from the top two U.S. telecoms, AT&T and Verizon.
Alcoa moved lower by 3.03% this past week, making it the eighth worst Dow component. Shares fell from the beginning of the week until the end, and nearly the whole drop can be blamed on China. The country is currently experiencing a slowing economy,and this past week the government announced that it will tighten its credit policy. These events will hurt Alcoa, since it needs strong capital spending and large construction projects to sell its aluminum to. But a slowing economy and tight credit aren't conducive to an environment in which we'll see massive building projects.
For the second week in a row, Microsoft has found itself on the list of the Dow's top losers, as shares declined 3.25%. Two weeks ago, the stock lost 3.61%, after the company announced that its new Xbox One gaming console won't be available in Asian markets until sometime in late 2014. This week the company made a few changes to its policies by making the device more user-friendly, including a removal of restrictions on the resale or trade of games. But the overall negativity in the market this past week, along with the rumors that Microsoft was in talks to purchase Nokia, sent shares tumbling.
The other Dow losers this week:
(For more information on why shares of these other losers were lower this past week, click on the links.)
- 3M, down 1.54%
- American Express, own 0.86%
- Bank of America, down 3.2%
- Boeing, down 2.25%
- Caterpillar, down 1.21%
- Chevron, down 1.76%
- ExxonMobil, down 1.38%
- General Electric, down 1.18%
- Hewlett-Packard, down 2.46%
- Home Depot, down 3.16%
- Intel, down 3.04%
- IBM, down 3.74%
- Johnson & Johnson, down 2.09%
- JPMorgan Chase, down 2.75%
- McDonald's, down 1.34%
- Merck, down 1.46%
- Pfizer, down 2.33%
- Procter & Gamble, down 0.89%
- Travelers, down 4.13%
- United Technologies, down 2.12%
- Verizon, down 2.59%
- Wal-Mart, down 2.01%
- Walt Disney, down 1.83%
More Foolish insight
Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Controlling about 15% of global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant simply click here now to get started.
The article Last Week's Worst Performing Dow Components originally appeared on Fool.com.Fool contributor Matt Thalman owns shares of Bank of America, Microsoft, JPMorgan Chase, Walt Disney, and Johnson & Johnson. 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 recommends 3M, American Express, Bank of America, Chevron, Cisco Systems, Coca-Cola, Home Depot, Intel, Johnson & Johnson, McDonald's, Procter & Gamble, and Walt Disney and owns shares of Bank of America, General Electric, Intel, InBM, Johnson & Johnson, JPMorgan Chase, McDonald's, Microsoft, and Walt Disney. 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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