Why These 3 Stocks Missed Today's Surge

The markets soared higher today, with investors receiving good news on the housing market and some observers hoping that the country will avoid the fiscal cliff. The Dow Jones Industrial Average (INDEX: ^DJI  ) gained 207 points, or 1.65%, for the day and currently sits at 12,795. Other indexes also had a good day, the S&P 500 (SNPINDEX: ^GSPC) ended the day up 27 points, or 1.99%, while the Nasdaq (NASDAQINDEX: ^IXIC) closed up 62 points, or 2.21%.

Not a single Dow stock ended the day in the red, but a few were beaten by the index itself. While the Dow climbed 1.65% today, Intel (Nasdaq: INTC  ) moved higher by just 0.3%, shares of Johnson & Johnson (NYSE: JNJ  ) increased by only 0.09%, and Microsoft (Nasdaq: MSFT  ) shareholders saw their stock rise by a mere 0.78%.

So why did they get left behind?
This morning, news broke that Intel CEO Paul Otellini will retire in May, after eight years at the helm. I mentioned earlier today that Intel is the second worst-performing Dow component this year, but whether that has anything to do with Otellini's departure is unknown. What is known is that Intel missed the move to mobile and the company has watched other chip manufactures build dominant market share positions in the smartphone and tablet industries, similar to what Intel holds in the PC world. And Intel knows that once you have it, it's hard for others to take it away.

Although Johnson & Johnson moved higher today, on a percentage basis, today it was the worst-performing Dow stock. Investors are still dealing with the news that Warren Buffett has sold off nearly his entire position in the company. This may have been a sign to other value investors that the time to get out is now and that to potentially new investors, it's not the time to buy.

Lastly, Microsoft caught only a part of the rally today. A recent report states that while Windows 8 is selling, it may not be performing as well as Windows 7 did at this time. One analyst following the company reported that 6% of the retailers he checked with said PC sales missed expectations this past week. The same check was performed in 2009 three weeks after Windows 7 was released, and not a signal retailer stated missed sales numbers. In 2009, 48% said they beat estimates, and now only 20% reported higher-than-expected numbers.  

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  • Report this Comment On November 20, 2012, at 11:37 AM, DanAxtell wrote:

    Truism alert! "Not a single Dow stock ended the day in the red, but a few were beaten by the index itself."

    Every day, at least a few Dow components are beaten by the index itself. Arithmetically, it must be so. Even today with Hewlett-Packard and Intel responsible for all of the Dow decline (^DJI down about 20, HPQ down 1.50, INTC down .80 around 11:00, with a Dow multiplier of 7.68), I count 13 components lagging the index.

    It's simply inevitable that some Dow components lag the Dow. These price moves could be the typical swings we see every day. I'm a little wary of detailed explanations of what might be insignificant.

    Further, any analysis of these lagging bulls should at least mention Beta. Some of JNJ's dawdling is its usual under-reaction rather than under-performance. Heck, it can be more attractive to widows and orphans for that reason.

  • Report this Comment On November 20, 2012, at 10:29 PM, DanAxtell wrote:

    Oops. I forgot that "today" has little meaning on the internet. Helpful articles take time, so "today" in the article does not equal "today" in the comment (contrary to the date stamps). If I had my life to live over again, I would have said, "today, a day later than the article." Of course, if I had my life to live over again, I would have picked all of the now-obvious soaring stocks and I would think I was a genius even though I was no less foolish than the first time I lived my life. Wait, what am I saying? Please don't make me live my life over again!

    Next time, I'll be more precise about what "today" means. That's all I'm saying.

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