Ugly Way to End What Had Been a Great Week on Wall Street
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.
As the closing bell rang today, the Dow Jones Industrial Average had lost an astonishing 185 points, or 1.19%, and now it sits at 15,451. This monster move downward came just two days after the index rose 147 points and set new intraday and closing all-time highs, after the Federal Reserve announced it would not begin tapering this month. Wednesday's rally put the Dow up 299 points in just three days, putting the index on pace to be the second best week since early July. But, after falling 40 points yesterday, and tanking today, the Dow ends the week up just 75 points, or 0.47%.
The other major indexes also lost ground today as the S&P 500 fell 0.72%, and the Nasdaq slid lower by 0.39%, but they both managed to post strong gains for the week, up 1.3% and 1.41%, respectively.
Let's take a look at a few of the reasons the Dow had such a rough afternoon.
Earlier this week, news broke that Sprint was going to offer an option for customers to upgrade their phones on a yearly basis, as opposed to the standard two-year cycle. Today, shares of AT&T and Verizon moved lower by 1.42% and 1.5%, respectively. One reason is that Sprint officially announced the change today, and made a point to indicate that the service plan that will accompany the early upgrade option will be much cheaper than comparable plans that AT&T and Verizon currently offer.
Sprint stated that its $65 per month plan closely compares to what a customer would get after paying $110 per month with one of the two larger carriers. Analysts have cut projections for Sprint because of the new service, as they felt it will hurt margins and overall profits. But, if the new offering can attract customers from AT&T and Verizon because of the cheaper service plans, it may end up being the two larger companies that will ultimately loose, with both customers and lower margins, if they attempt to compete with Sprint on price.
One of the Dow's biggest losers of the day was United Technologies , which fell 2.16% this afternoon. The move came after news broke indicating that United Tech's Pratt & Whitney division and Rolls-Royce were abandoning their possible joint venture plan. The two companies had previously discussed the idea of joining forces to build the next generation engine that would be used in both Airbus aircraft and Boeing planes. The venture would have given the companies essentially a monopoly on the engine market for narrow-body planes, which is what the two organizations realized, and why they ultimately decided not to move forward with the plan.
Neither company felt the regulators in either the UK or the United States would have allowed the partnership; thus, why waste the time and money now. Investors sold off United Technologies today, though, in disappointment, because had this venture gone through, it would have given the company a massive advantage against other competitors in terms of technology, and pricing power with customers.
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The article Ugly Way to End What Had Been a Great Week on Wall Street originally appeared on Fool.com.Fool contributor Matt Thalman has no position in any stocks mentioned. 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 has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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