Last Week's Big Dow Losers
Feb 16th 2013 5:00PM
Updated Feb 17th 2013 11:00AM
After starting the year off on a six-week winning streak, the Nasdaq finally posted a losing week in 2013. The index lost 0.05%, as the Dow Jones Industrial Average finished the week down 0.08% or 11, points and now sits at 13,981.
Although the Nasdaq broke its 2013 streak, the S&P 500 managed to keep its running into week No. 7. The S&P added another 1.89 points, or 0.12%, and now sits at 1,519 while it continues moving toward its all-time high of 1,565.
All the major U.S. indexes have been on quite the bullish run thus far in 2013, which gives the bears and pundits more ammunition for the argument that a pullback is coming. While I'm not sure if a complete market correction is in store for investors, what I do know is that a number of Dow stocks had their own corrections this week. Of the index's 30 components, 13 of them ended the week in the red, and of those, six were down more than 1%.
But before I point out the Dow losers, let's look at the week's big winner. Shares of Alcoa closed the week up 4.25%, with a large part of that gain happening on Thursday, after it was announced that through a middleman, Alcoa, and the Chinese government are now essentially partners. The quick story is that a Chinese state-owned enterprise, the CITIC Group, spent $467 million for a 13% stake in Australia's Alumina. Alumina's main asset is a 40% stake in a joint venture with Alcoa, called Alcoa World Aluminum & Chemicals.
In the short term, Alcoa may not see many benefits from this new partner, but in the long run it could be very beneficial if Alcoa and the Chinese government align their common interests.
The big losers
Shares of Wal-Mart ended the week down more than 3%. On Thursday the company's British arm, Asda, reported that it had found traces of horse DNA in products that were labeled as beef on its shelves. The company quickly removed those products, along with other items that came from the same supplier.
That was bad enough, but it didn't compare with the damage that a supposed email from a Wal-Mart vice president would do to the stock on Friday. At roughly 2:00 p.m. ET, Bloomberg quoted the Wal-Mart executive saying in an email, "In case you haven't seen a sales report these days, February MTD [month-to-date] sales are a total disaster." Those few words helped the stock drop more than 2% on Friday alone.
After falling 2.65% two weeks ago, Caterpillar lost another 1.28% this past week. A large chunk of that drop came on Wednesday, when the stock fell more 0.89% after Samuel Allen, Deere's CEO, said in a conference call this week that his company's "near-term outlook is being tempered by uncertainties over fiscal, economic, and trade issues that are undermining business confidence and restraining growth." Caterpillar and Deere will face the same economic issues both in the short and long terms, so what happens to one will probably happen to the other.
They say that insiders can sell for a number of reasons, but they buy for only one. I believe that to be true. Insiders might sell to diversify their holdings, pay for a large purchase, or avoid what they see as an upcoming fall in the stock price. But they'll buy only if they expect the stock to go higher. At DuPont, insiders have purchased zero shares over the past nine months, but in just the past two months alone, they've sold more than 184,000 shares -- and that was after selling only 118,000 during the previous seven months. Just based on the increased selling, it may be time to follow their lead and walk away from DuPont. The company's stock closed down 1.17% for the week.
The Golden Arches also had a rough week, as shares dropped slightly more than 1%. On Wednesday, McDonald's lost 1.3% of its value after investors reacted to the possible minimum-wage increase that President Obama proposed the night before in his State of the Union address. A large percentage of the fast-food company's workforce makes minimum wage, meaning costs would rise while margins and profits would tumble.
And finally, we come to the biggest loser Dow loser of this past week: Coca-Cola saw shares drop 3.48% during the past five trading sessions. Coke announced quarterly earnings this week that highlighted declining volume in major markets around the world. The world's No. 1 beverage company did beat analysts on earnings per share, but it missed on revenue. The company also took a hit after PepsiCo announced a new morning beverage and after a health-advocacy group asked the government to limit the amount of sugar found in food and beverage items sold in the U.S. -- one of them, of course, being soft drinks.
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 buying shares in the company, you'll want to click here now and get started!
The article Last Week's Big Dow Losers originally appeared on Fool.com.Fool contributor Matt Thalman has no position in any stocks mentioned. Follow Matt on Twitter: @mthalman5513. The Motley Fool recommends Coca-Cola, McDonald's, and PepsiCo and owns shares of McDonald's and PepsiCo. 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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