This Week's Biggest Dow Losers
Nov 3rd 2012 5:00PM
Updated Nov 3rd 2012 5:02PM
Even though the Dow Jones Industrial Average (INDEX: ^DJI) missed two days this week, it still managed to give investors quite the rollercoaster ride. The Dow closed last Friday at 13,107.21, and as the bell rang yesterday, the index sat just 0.1% lower at 13,093.16.
A few components ended the week higher. Bank of America (NYS: BAC) closed up more than 8% from where it was at the end of last week. Boosted by Hurricane Sandy, Home Depot (NYS: HD) closed the week up 3.29% as McDonald's (NYS: MCD) even managed to end the week up 0.17%, and even though IBM (NYS: IBM) fell $3.72 or 1.89% yesterday, the company still ended the short week higher by 0.07%.
But not all the components were so lucky, and most lost more than the index itself. The four biggest losers this week were, Chevron (NYS: CVX) , Travelers (NYS: TRV) , Walt Disney (NYS: DIS) , and Wal-Mart (NYS: WMT) .
So why are they down?
Chevron fell 2.5% based on the closing price yesterday compared with the previous Friday. The decline all came on the last day of the trading this week, when the stock shed 2.77%. The company announced earnings early yesterday morning, and investors were not pleased. Fellow Dow oil giant ExxonMobil (NYS: XOM) also had a poor performance on Friday, losing 1.45%, but ended the week only slightly lower. Both companies took hits during the third quarter because of lower oil prices and reduced refinery production. To find out more on why they fell, click here.
In case you haven't heard, this wasn't a good week to be in the insurance business. Now that the cleanup of Hurricane Sandy has begun, we're getting a better idea of the insurable costs, but the exact amount won't be known for quite a long time. At this point what we do know is, the storm was downgraded before hitting land, and that means the insurance companies will be on the hook for more of the damage caused by the storm. The only Dow insurance company, Travelers, lost 2.7% in just the three days of trading.
Disney was also cut down in size this week. After opening on Wednesday at $51.15, the stock closed yesterday at $49.86, down 2.5%. The company announced on Tuesday, when the markets were still closed because of Hurricane Sandy, that it has agreed to purchased Lucasfilm for $4 billion. Disney will pay for the deal with cash and 40 million shares, which will give George Lucas a 2.2% stake in Disney. What caused concern for shareholders was probably not the deal itself, since Disney has been great in recent years when it comes to acquisitions. Instead, it was probably the 40 million-share dilution. While the company did say it will repurchase the same number of shares back over the next two years, which is in addition to its current share-buyback program, the initial dilution of such a large number of shares can scare away short-sighted investors.
Finally, the biggest Dow loser this week was Wal-Mart, dropping 3.1% from 4 p.m. ET last Friday to 4 o'clock yesterday. The big-box retailer saw shares drop 2% on Thursday after rival Amazon.com (NAS: AMZN) announced that it will start "Black Friday Countdown" deals now. In recent years, Amazon has been very aggressive during the holiday shopping season, and it doesn't look like this year will be any different. Last year it was the discount for customers price-checking its competition, and now we have extremely early holiday season specials. For shoppers who don't like to wait until Black Friday, getting a deal now could make the difference on where they will shop.
Also this week, a coalition involving Wal-Mart, General Electric (NYS: GE) , Boeing (NYS: BA) , and a few other organizations and labor groups issued a manifesto requesting clear pricing for medical services from insurance companies and the health-care industry as a whole. With rising health-care costs for both employees and employers, the need for upfront transparent pricing should be an industry standard. The coalition believes consumers have the right to shop around for the best price that will meet their health-care needs, as customers do in every other retail setting.
After this week's 8% gain and a massive run-up of 77% year to date, Bank of America is easily the best-performing Dow component of 2012. The question most shareholders and potential investors are asking: "Is Bank of America still a buy today?" Our senior banking analyst, Anand Chokkavelu, recently put together a report that will walk you through the potential risks and possible opportunities the bank faces in the coming months and years. Don't let another week go by in which the stock moves 8% higher because you were on the fence about buying in. Confirm your fears or validate your beliefs that the stock can move higher by clicking here.
The article This Week's Biggest Dow Losers originally appeared on Fool.com.Matt Thalman owns shares of Bank of America and Amazon.com. The Motley Fool owns shares of Amazon.com, Bank of America, Walt Disney, General Electric, IBM, McDonald's, and ExxonMobil. Motley Fool newsletter services recommend Amazon.com, Chevron, Walt Disney, Home Depot, IBM, and McDonald's. 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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