Check Out This Week's 7 Dow Losers
Dec 8th 2012 5:00PM
Updated Dec 8th 2012 5:08PM
This week, investors received a number of mixed signals about the health of the economy. The number of unemployment claims fell along with the national unemployment rate, but the number of Americans actively searching for a job also fell, which many believe was the cause behind the lower unemployment rate. The consumer sentiment preliminary reading for December also fell much further than analysts thought it would, and U.S. manufacturing dropped lower than expected.
But good news came from Europe as Greece reduced its national debt and Spain formally asked for a bailout. Back here at home, investors didn't see very much progress on the negations to avoid the fiscal cliff, but none of that stopped investors from buying blue chip stocks this week.
The Dow Jones Industrial Average posted a weekly gain of 0.98%, while the S&P 500 inched higher by 0.12%, or 2 points, and the Nasdaq lost 1.68% during the lpst five days of trading. With the Dow the big index winner, only seven of its 30 components ended the week in the red.
But before we get to the big losers, I would like to point out that Bank of America was the Dow's biggest winner. Shares of the bank moved higher by 7.15%. The main catalyst came on Wednesday, when Citigroup announced that it will lay off 11,000 employees ,or 4% of its workforce. The move highlights a new trend in the banking industry in which fewer employees are needed because of technological innovations changing the way we bank. Online banking, mobile check deposit features, more direct deposits of paychecks, and a wide network of ATMs have made the local bank teller less important. More than half of Citigroup's cuts will hit the consumer banking unit.
Now to this week's losers
For the second week in a row, Microsoft is on the losers list. Last week, the stock was the worst Dow performer, and although this week it didn't perform quite that badly, the share price continues to fall for the same reasons -- poor Surface sales and a shrinking PC market. My Fool colleague Jeremy Bowman noted this week that a Goldman Sachs report highlights why Microsoft has performed poorly in recent years: In 2000 Microsoft owned 97% of the computing market and now controls only 20%. Shares of the once-dominant software company were down 1.19% this week.
Another two-week-running loser was AT&T , which saw its shares slide 1.43%. But unlike last week, when its closest competitor managed to move higher, shares of Verizon Communications also lost value during this week. One force driving both companies' shares lower was an announcement from T-Mobile that it will soon become the last major wireless service provider to offer the iPhone. While this move may slightly affect the other companies, the more shocking news was that T-Mobile will no longer subsidize smartphones. This move will allow customers to more freely upgrade phones and won't require them to sign yearly contracts, all while it helps T-Mobile cut costs.
The last driver moving the big telecoms lower was a report indicating that text messaging declined for the first time ever in the third quarter. As of now, the lower volume is being blamed on apps that allow users to message each other through an Internet connection, and if this trend continues, the huge revenue stream generated by standard texting may soon begin shrinking.
Shares of Disney , meanwhile, ended the week down 1.06%, primarily because the stock went ex-dividend on Thursday. The company pays its dividend only once a year, so the 1.5% yield can have a large impact on the share price. On the newsworthy side of things, the company announced a deal with streaming video service Netflix , which will own the rights to show Disney content beginning in 2016. Investors seemed to like the deal from Netflix's position more than from Disney's, as shares of Netflix rose higher by 4.9% during the week.
UnitedHealth Group also went ex-dividend this week, and shares ended the week lower by 1.26%. The company paid out its quarterly dividend, but the $0.21 didn't have as much of an effect on the share price as Disney's dividend had. Another factor affecting the share price this week was investors' increasing concern pertaining to the Affordable Care Act and how it will ultimately affect profits for health insurers. As of now, no one truly knows how the balance of low-cost customers to high-cost ones will play out, and whether the health-care industry can become more efficient now that all customers are insured.
The other two Dow losers this week where Coca-Cola , which lost 0.5% of its value, and Du Pont , which saw its shares decline by 0.57%. Last week, it was announced that Du Pont had lied to investors and a federal court about the right to use patented seed technology owned by its rival, Monsanto . While that hangover could have had some effect on the stock price this week, one of my Fool colleagues believes the stock slid lower because of the poor manufacturing numbers released on Monday.
As for Coke, very little negative news was published this week about the company, and as longtime market participants know, sometimes stocks just move lower for no real reason. With that said, there is absolutely no question that Coca-Cola has been great to long-term shareholders, but the company faces some new threats to its continued market dominance. We've recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are thinking about owning shares in the company, you'll want to click here now and get started!
The article Check Out This Week's 7 Dow Losers originally appeared on Fool.com.Fool contributor Matt Thalman owns shares of Citigroup, Microsoft, Walt Disney, and Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, Walt Disney, Microsoft, and Netflix. Motley Fool newsletter services recommend Walt Disney, Coca-Cola, Monsanto, Microsoft, Netflix, and UnitedHealth Group. 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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