Why the Dow's Energy Giants Fell on a Double-Record Day

The long-awaited reunion of stock market benchmarks at record-high levels finally happened today, as the S&P 500 joined the Dow Jones Industrials (DJINDICES: ^DJI  ) in climbing above its former 2007 highs. Continuing positive economic data on the domestic front outweighed any concerns about the global economic situation, and the markets finished near their highs of the day, with the Dow gaining 52 points, and the S&P climbing six points, to 1,569.

Most of the Dow's component stocks advanced, but one weak spot was energy. Even though oil prices rose more than $0.50, to climb above $97 per barrel, both Chevron (NYSE: CVX  ) and ExxonMobil (NYSE: XOM  ) posted losses on the day, with most of the declines coming at the very end of the trading day.

Chevron suffered the bigger loss, falling more than 1% on critical comments from the governor of Utah over multiple spills from ruptured pipelines within the state over the past several years. The potential liability involved in the most recent Willard Bay State Park spill is likely insubstantial for the company, but the episode highlights the many environmental concerns over increased pipeline-building and drilling activity.

Exxon fell 0.5% on similarly sparse news, with the company saying that its chemical subsidiary would license technology to South African energy giant Sasol for a polyethylene plant in Louisiana. But the end-of-day move for both stocks looks more like what you'd see from an institutional rebalancing of portfolios geared to de-emphasize energy stocks.

Beyond the Dow, Five Below (NASDAQ: FIVE  ) fell more than 3% as it gave negative guidance for its current quarter in its quarterly report last night. Despite having seen good success in its low-price under-$5 business model, Five Below said that options granted to the company's founders would result in some tax-related expenses that would hurt earnings per share, and it also projected sales below expectations.

Finally, Boyd Gaming (NYSE: BYD  ) fell 4.5%. Despite the potential boon from the legalization of New Jersey gambling, Boyd still faces a tough overall environment in the gaming industry. Even if the economy starts to pick up, heavy competition on the domestic gaming front will require Boyd to keep fighting hard to get and keep patrons coming into its casinos.

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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.

  • Report this Comment On March 28, 2013, at 10:03 PM, chris293 wrote:

    Ever hear of profit taking? Its the quarter's end and many investors may be reajusting their funds or portfolios. There are reasons that cause buying or selling, you or I need to know what we want to do. The people who sold Chevron and Exxon might just buy their shares back at 'wait', at a lower price. That is the type of game the markets run.

  • Report this Comment On March 29, 2013, at 10:06 PM, harmonyjoe wrote:

    The comments made by chris293 make a heck of a lot more sense at least as they relate to Chevron or Exxon than anything I read in the article.

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