The Dow Hits a Dozen Records for 2014, but Goldman Sachs and DuPont Fall on Challenges

The Dow Jones Industrials (DJINDICES: ^DJI  ) finished Tuesday with a gain of 129 points, hitting a new all-time high and falling just short of hitting the 17,000 level at one point during the trading day. Most market participants attributed the gains to favorable data from the manufacturing sector, and the monthly phenomenon that often sends stocks rising on the first trading day of the month might have played a role in the advance as well. The S&P 500 also set a new record in a fairly broad-based rally, but several stocks nevertheless missed out on the positive day, with Goldman Sachs (NYSE: GS  ) and DuPont (NYSE: DD  ) among the more notable declining stocks today.


Source: DuPont.

Goldman Sachs fell by about 0.4% on Tuesday, with the Wall Street giant dealing with news on a number of fronts. The Dow component got fined $800,000 by the Financial Industry Regulatory Authority over alleged violations related to dark pools, and although the money award is inconsequential, the episode further worsens Goldman's reputation on an increasingly controversial area for the brokerage industry. Reports of workforce reductions in the fixed-income arena appear imminent, with the bond market having become too quiet for Goldman Sachs to earn as much as it did in the past in more turbulent credit-market environments. Meanwhile, some believe that Goldman Sachs might buy an online discount brokerage firm to try to broaden its appeal, reaching out to an audience that has historically seemed like far from a perfect match for the upper-crust financier firm. Whatever it does, Goldman has to find a way to foster growth even in a hostile regulatory environment.

DuPont dropped just a few pennies today, but the chemical company has had to deal with a lot of turmoil recently. A profit warning late last month showed that even DuPont's much-heralded agricultural segment is vulnerable to downturns, with the company having bet wrong on the size of the spring's corn planting and therefore finding itself with high levels of corn-seed inventory. More broadly, investors have waited patiently for more details on how DuPont plans to split off its performance-chemicals business from the rest of its operations, with some noting that the reduction in DuPont's size could lead the managers of the Dow Jones Industrials to take the company out of the average if it shrinks too far.

It's reasonable for companies not to participate in overall gains for the Dow Jones Industrials on any given day. In the longer run, though, investors should keep an eye on DuPont, Goldman, and other laggard stocks to make sure that structural flaws aren't what's holding back their shares from advancing with the Dow.

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  • Report this Comment On July 02, 2014, at 12:16 AM, funfundvierzig wrote:

    The "much heralded agricultural segment" of DuPont has been to a large degree a fiction of PR bombast and braggadocio by DuPont Management for several years. Here's the commercial reality:

    Unfortunately for DD shareholders, Ms. Ellen J. Kullman, DuPont Chieftess, in her struggle to give the DuPont bureaucracy a Monsanto-Makeover is a decade too late and too far behind the leaders in the global agricultural arena.

    DuPont is in a lowly sixth place in the sale of ag chemicals and crop protection behind world-leader, Switzerland-based Syngenta, followed by Bayer, BASF, Dow Chemical, and Monsanto.

    DuPont is an also-ran in seeds, with a growing gap between it and front-running Monsanto, the global leader in seed biotechnology.

    The lack of scientific and managerial talent at DuPont in the ag area has been conspicuous during the past few years, first with the commercially failed GM seed trait, DuPont OptimumGAP, and then with the $2 billion consumer fraud involving a dandelion herbicide which killed hundreds of thousands of mature landscaping trees countrywide, before being banned by the U. S. EPA. DuPont Imprelis, tell us!

    Bottom-line, the much shrunken and shrinking DuPont is in serious trouble and no longer represents the vibrancy and growth of the American economy, a traditional requisite for inclusion in the venerable Dow-Jones Industrial Index.

    ...funfun..

  • Report this Comment On July 02, 2014, at 6:34 AM, funfundvierzig wrote:

    What we do know about the murky proposal of DuPont leaders to ditch Teflon, TIO2, refrigerants and fluorochemicals, and acids via a spin-off:

    DuPont Management will be deleting $7 billion or 20% of its total yearly revenues of circa $36 billion. In addition, a huge cash flow will likewise be ditched, cash flow which contributes to the obese overhead of this flagging chemicals and ag conglomerate based in the dwarf state of Delaware.

    It is not unlikely the dividend pay-out of DuPont will be shrunk post spin-off of chemicals. We remain staunchly unconvinced this decade-too-late Monsanto-Makeover will benefit DD shareholders.

    ...funfun..

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