Why Visa Is Leading the Dow Jones Down Today

The Dow Jones Industrial Average  is slipping today, led downward by Visa , which is having an outsize effect on the index due to its $209 share price (Dow components are weighted somewhat arbitrarily by stock price). The S&P 500 has fallen from its highs today, losing a substantial 0.85%.

Visa is down 3% today after numerous pieces of bad news. Earlier this week Wal-Mart sued Visa over what it believes to be the illegal price fixing of swipe fees. Wal-Mart alleges $5 billion in damages, and because this is an antitrust case, if Wal-Mart wins it may be able to claim a penalty of three times that amount. In December, MasterCard and Visa settled a case with retailers for $7.5 billion in damages over the same allegations, but Wal-Mart, among others, opted out of the settlement in order to pursue their own suits. The first case took seven years to settle, and this one will likely take years as well.

Second, today Wal-Mart announced that it will switch its branded cards from Discover to MasterCard. This is a win for MasterCard and a missed opportunity for Visa, as Wal-Mart is the largest retailer in the U.S.

While the Dow only includes stalwart blue chips, sell-offs in speculative stocks in the technology and biotech sectors are nevertheless weighing on the Dow today. The biotech sector, as represented by the SPDR S&P Biotech ETF, is down 5%. The biggest technology stocks, as represented by the Nasdaq 100, are down 2.3%.

^DJI Chart

^DJI data by YCharts.

The Nasdaq 100 is being led down by Microsoft, Apple, and Google, which together make up 28% of the Nasdaq 100.

The greatest thing Warren Buffett ever said
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

The article Why Visa Is Leading the Dow Jones Down Today originally appeared on Fool.com.

Dan Dzombakcan be found on Twitter @DanDzombakor on his Facebook page,DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends Visa. The Motley Fool owns shares of Microsoft and Visa. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story