Why These Were the Dow's 3 Biggest Losers Today

The Dow Jones Industrial Average (INDEX: ^DJI  ) slipped 27 points today, or 0.21%. But some stocks fared worse than others. These were the three biggest losers:

Company

Price Change

Wal-Mart (NYSE: WMT  ) 2.4%
Intel (Nasdaq: INTC  ) 1.7%
Kraft (NYSE: KFT  ) 1.6%

Wal-Mart continues to slide after falling nearly 4% yesterday following its earnings announcement. Total sales were up 4.5% during the holiday quarter, but earnings fell 12% as the discount retailer had to slash prices to attract cash-strapped consumers. Investors will want to keep an eye on unemployment figures, which may be slowly declining but are still uncomfortably high for companies like Wal-Mart, whose customers tend to have lower incomes.

Intel shares fell after Dell (Nasdaq: DELL  ) reported weak earnings. Sales rose slightly, but the PC giant's net income fell 18%. Although its large-enterprise business is still performing well, its public institution unit struggled. PC sales are obviously significant for Intel, the dominant player in the market for PC chips. Generally speaking, sales in emerging markets have remained strong, but analysts are worried about U.S. PC sales as consumer dollars have shifted to ARM Holdings-based devices like smartphones and tablets. There have been also been reports that Apple may be working on its own chips based on ARM technology that could potentially replace Intel's in its computers.

Kraft is down about the same amount that shares rose yesterday on its solid earnings announcement. Sales grew 6.6%, and earnings rose 54%, largely based on cost-savings. Kraft is planning to split up its snack and grocery brands into two separate companies later this year. As I've noted before, the good giant's above-average valuation is one factor that seems to be weighing on the stock.

Wal-Mart, Intel, and Kraft all lost to the market today, but it's important to remember that what happens in the market on a day-to-day or even week-to-week basis doesn't matter nearly as much as how our stocks perform over the long run. If you're interested in one stock that our chief investment officer picked to crush the market, check out our brand-new report, "The Motley Fool's Top Stock for 2012." It highlights a company that is revolutionizing commerce in Latin America. For a limited time, you can get instant access to the name of this company for free

Ilan Moscovitz owns shares of Apple. The Motley Fool owns shares of Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores and Intel, writing covered calls in Dell, and creating a diagonal call position in Wal-Mart Stores. 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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  • Report this Comment On February 22, 2012, at 9:01 PM, winklerf wrote:

    I really don't get the Dell miss affecting Intel. Their top line revenue beat rather than missed. Last I checked, Dell getting less of the profit from computer sales isn't bad for Intel, so the net miss doesn't matter. As for problems with the US consumer PC market, this isn't that much of Intel's income. Not only is the US not their number one market anymore, but it is a more server rich market than most others. The US consumer market just isn't that important to them when there is a fast growing server market and emerging consumer markets that are becoming the dominant part of their revenue.

    Yes, there is a threat that as computing becomes more mobile Intel will get a diminishing portion of the consumer business. However, this particular result isn't a smoking gun. What probably spooked investors more is Dell's and HP's lack of guidance for the full year, which is going to be hard to predict with so many new forms of PC and tablet coming out. There is going to be a form factor war and no one is sure what will come of it. Because of this I would say that investors should be concerned about any company that is highly dependent upon the fickle consumer market.

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