Why 2 Dow Stocks Are Sinking

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The Dow Jones Industrial Average (INDEX: ^DJI  ) is headed higher this afternoon. As of 1 p.m. EST, the Dow is up 19 points, or 0.15%, with 13 of the index's 30 components in the red. While most of the losers are just slightly lower, both Microsoft (Nasdaq: MSFT  ) and Hewlett-Packard (NYSE: HPQ  ) are down more than 2%.

With the world and business interconnected like never before, when one company says or does something, it can have major effects on another. Such is the case today, where we have two Dow stocks moving lower because of two other Dow components.

So who are they, and why are they down?
Yesterday Microsoft announced poor results from both the Surface tablet and Windows 8's first three days on the market. Today, the man in charge of the Windows 8 program announced he is leaving the company. Shares of Microsoft are down almost 3% on the news today, but as I have discussed before, the PC makers were counting on a Windows 8 refresh to boost sales. Hewlett-Packard needs something to help revive the company, and some investors believed Windows was part of the solution. But that clearly doesn't look like it will be the saving grace. Shares of HP are down about 2.2%.

Yesterday, analysts at JPMorgan cut Caterpillar's (NYSE: CAT  ) rating from overweight to neutral and slapped a $90 price target on the stock, citing concerns that the company has excessive inventory at a time when spending on mining equipment is reduced. Caterpillar shareholders may still have a few rough quarters ahead. The stock ended yesterday higher by 0.28% but is now down more than 1%.

Today, Home Depot (NYSE: HD  ) announced third-quarter earnings that beat estimates on the top and bottom lines. Most investors look at Home Depot as an indicator of the health of the housing market, and Caterpillar needs that market to be strong. On the surface it seems housing is turning around, but perhaps not fast enough. Home Depot chairman and CEO Frank Blake said, "Our third quarter results were better than we expected and reflected, in part, what we believe is the start of the path toward the healing of the housing market." We have been waiting for the housing recovery for nearly four years now, and one of the best indicators is telling us we are just starting to move forward.

Foolishly investing
Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Read all about Caterpillar's strengths and weaknesses in our brand-new report. Just click here to access it now.

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Related Tickers

10/20/2016 4:00 PM
CAT $86.63 Down -0.60 -0.69%
Caterpillar CAPS Rating: ***
HD $126.25 Up +0.36 +0.29%
Home Depot CAPS Rating: ****
HPQ $14.10 Down -0.02 -0.14%
HP CAPS Rating: ***
MSFT $57.25 Down -0.28 -0.49%
Microsoft CAPS Rating: ****