Consumer-Facing Stocks Led the Dow Lower

Even though European officials agreed to a bailout for Cyprus, the terms of the agreement raised concerns with investors today. The small island nation will receive 10 billion euros, which will help recapitalize banks there. Well, all but the country's second-largest bank, which will be shut down. The agreement not only calls for the closure of the bank but depositors with more than 100,000 euros will likely lose a large portion of their money.

The reason a country with a GDP of roughly $22 billion and fewer than 1 million citizens matters is that many fear the bailout model being demonstrated in Cyprus will soon become the model for all European bailouts. That fear could put stress on banks in Spain, Italy, and Greece if citizens begin pulling funds from financial institutions in those countries.  

With all the fear and uncertainty circling the markets today, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed lower by 64 points, or 0.44%, and now sits at 14,447. The other major indexes performed slightly better as the S&P 500 closed lower by 0.33% and the Nasdaq dropped 0.3% today.

Top Dow losers
Shares of Walt Disney (NYSE: DIS  ) fell 1% this afternoon on the heels of a report that the board of directors of Hulu was looking for a buyer. Disney and News Corp. own the streaming video service, which has more than 3 million paying subscribers and generated $700 million in revenue last year.

Reports indicate that there are several buyers interested, but as we have seen in the past, if the price is not right, Hulu's board will reject the offer. In 2011, a buyout offer was rejected. The possibility that Disney and News Corp. would each buy the other out has also been floated.  

McDonald's (NYSE: MCD  ) also ended the day lower by 1.04%. Business Insider reportedly received a copy of an internal memo today, which paints a defensive picture of the burger king. The memo discusses the initial launch of McDonald's McWrap, and claims that 22% of customers ages 18-32 would likely eat at Subway if McDonald's didn’t offer the wrap. The company calls the wrap a "subway buster" and claims that the millennial age group wants variety and options. The wrap supposedly will give customers choices and the ability to customize their meal.

But the most shocking and damaging information for investors was that the memo stated that "McDonald's was not in the top 10 of millennial's (age 18-32) favorite restaurants." This is a large demographic and one that McDonald's needs to attract if it wants to remain the No. 1 fast-food restaurant for the next 10, 20, 50 years.

Johnson & Johnson (NYSE: JNJ  ) lost 0.08% today after it announced a recall for its OneTouch Verio IQ blood glucose meters. The LifeScan unit of J & J, which makes and markets the device, said that at extremely high blood glucose levels, the device shuts off and does not give any warning to the user. My Fool colleague Brian Orelli goes further into the problem, which you can read by clicking here.   

More foolish insight

After making investors rich in 2011, McDonald’s has been one of the worst-performing blue-chip stocks of 2012. Our top analyst on the company will tell you whether you should be worried by this trend, and he’ll shed light on whether McDonald’s is a buy at today's prices. Click here now to read our premium research report on the company.


Read/Post Comments (0) | Recommend This Article (5)

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: 2331078, ~/Articles/ArticleHandler.aspx, 11/24/2014 10:23:02 AM

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