3 Dow Stocks Trading Lower

The Dow Jones Industrial Average (INDEX: ^DJI  ) is flatlining today. As of 12:30 p.m. it is at 13,550, down just 2.41 points, or 0.02%. The index is still up by 11.11% year to date, and only four components are down over the same time period. Of the 30 Dow components, 19 are trading lower this session. Three of those companies are AT&T (NYSE: T  ) , Alcoa (NYSE: AA  ) , and Bank of America (NYSE: BAC  ) .

So why are they down?
With Apple (Nasdaq: AAPL  ) selling more than 2 million iPhone 5 units in the first day, carriers such as AT&T are seeing their cost rise with every iPhone sold. When a customer buys an iPhone from AT&T for around $200, AT&T gives Apple roughly $400. The idea is that the carrier is locking the customer into a two-year contract and will make the $400 paid to Apple and then some over the contracted time frame. The reason investors are selling shares of AT&T, which is currently down 0.29%, is that in the short term these costs look bad on quarterly statements. However, long-term investors understand that short-term pain often means long-term gain.

Shares of Alcoa are trading lower by 0.73% this afternoon. The slide comes after Jefferies downgraded the company from "hold" to "buy." An adjusted price target of $11 was also announced. Jefferies believes Freeport-McMoRan is a better play for investors looking for exposure in the base-metal sector.

Finally, Bank of America is sliding again today, down 0.75% for the trading session. Banking regulators in Washington released a statement this morning indicating that the number of originated loans fell by about 10% 2011 from 2010. There was a 13% decline in refinancing and a 5% fall in lending. This news comes just days after B of A's CFO said his company is ready to get back to its core business of lending money. For more than two years the bank has been selling off noncore assets, and now feels it has cleaned up its business mix. Management is putting more emphasis on loan growth at a time when the number of loans is declining.

Long-term investors understand that a tree planted today will bear fruit tomorrow. AT&T is attempting to do just that, and the 4.7% dividend yield helps keep investors waiting for the harvest. Downgrades and upgrades are constant; if you are always chasing the analyst, you’re going to lose to the market. Bank of America has been the best-performing Dow Stock this year, but our analyst believes there is a better bank to own. Check out this special free research report: "The Only Big Bank Built to Last." Click here to find out where you should be investing your money.

Fool Contributor Matt Thalman owns shares of Bank of America and Apple. The Motley Fool owns shares of Bank of America and Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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