6 Reasons Why the Dow Closed Lower

After a five-day winning streak, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) managed to post a losing session today, as the other major indexes rose. The Dow closed down by 23 points, or 0.17%, and now rests at 13,511. The S&P 500 (SNPINDEX: ^GSPC  ) closed up 0.29 points, or 0.02%, while the NASDAQ (NASDAQINDEX: ^IXIC  ) gained 6 points, or 0.22%.

Of the Dow's 30 components, 16 of them ended the trading day in the red. This afternoon, I explained why three of the Dow losers were DuPont (NYSE: DD  ) , Caterpillar (NYSE: CAT  ) , and Alcoa (NYSE: AA  ) . To read about the negative news that caused these companies to fall lower, click here. Or stick around to learn about the outside forces affecting the stock prices of AT&T (NYSE: T  ) , Verizon (NYSE: VZ  ) , and Boeing (NYSE: BA  ) .

So what happened?
Both of the Dow's telecommunications giants had a rough time on Wall Street today. Shares of AT&T fell by 1.48% while Verizon's dropped by 1.1%. Both wireless service providers are set to announce quarterly earnings next week, and investors are probably getting nervous about the short-term costs the companies will likely take from offering subsidies for cell phones in return for customers signing long-term service contracts. AT&T will announce results next Thursday, Jan. 24, while Verizon is scheduled to release its earnings report on Tuesday, Jan. 22. AT&T recently reported that it had sold 10 million smartphones in the fourth quarter, a record for the company. At this time, it is unknown how many Verizon sold or how much it cost the service providers to sell that many phones.  

In the short term, selling more phones will hurt the bottom lines of both AT&T and Verizon, but over the life of the contract, the companies make that money back plus some. Long-term shareholders and investors should praise higher cell phone sales numbers and buy on dips when shortsighted investors sell in droves.

Shares of Boeing lost 3.38% of their value today, making it the worst-performing Dow component. The company has been plagued by problems with its new 787 Dreamliner aircraft over the past few weeks and today another issue popped up, causing the stock to drop. This morning a 787 made an emergency landing after an alert went off from the plane's battery system. Last Monday, a 787 at Boston's Logan International Airport had a fire in the battery system's compartment.  The two leading Japanese airlines grounded their 787 fleets until further safety reviews are conducted.  

More Foolish insight

With great opportunity comes great responsibility. For Boeing, which operates as a major player in a multitrillion dollar market, the opportunity is absolutely massive. However, the company's execution problems and emerging competitors have investors wondering whether Boeing will live up to its shareholder responsibilities. In this premium research report, two of the Fool's best industrial industry minds have collaborated to provide investors with the key, must-know issues around Boeing. They'll be updating the report as key news hits, so make sure to claim a copy today by clicking here now.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2200417, ~/Articles/ArticleHandler.aspx, 9/1/2014 5:40:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement