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After the Dow Jones Industrial Average (DJINDICES: ^DJI ) charged to a new record high yesterday on the back of strong economic data, the blue chips gave back exactly all of those gains today, falling 106 points, or 0.7%. There was no major news dragging the Dow down, but fear of the Fed's curtailing its stimulus program has hung in the air for the past week, and investors also seem to feel the market rally may have gotten ahead of itself as major indexes are already up more than 15% this year.
Ten-Year Treasury Yields (INDEX: ^TNX) also climbed to as high as 2.23% last night, their highest mark in more than a year, which seems to have provoked a flight from dividend stocks to the safer T-notes. The Fed's murmurs on cutting its bond-buying program also seem to have prompted the rise in treasury yields as loose monetary policy is generally bad for bond investors since it can cause inflation. The benchmark bond yields are up more than 10% since Fed Chairman Ben Bernanke's speech last Wednesday.
The flight to bonds can be seen in the list of the Dow's biggest losers today as Coca-Cola (NYSE: KO ) , Pfizer, Verizon, and Procter & Gamble all fell 2.4% or more. All four companies are considered defensive stocks as they pay high-yielding dividends and are relatively stable as their products are in demand regardless of the general macroeconomic climate.
Coke shares may also be sweating as a strike at a Venezuelan bottling plant seems to have intensified in its ninth day as today workers soldered the plant gates shut. Coke said the strike had so far cost the company 15% of its sales in the country of 30 million and called it "illegal," "arbitrary," and "crazy."
Alcoa (NYSE: AA ) shares were essentially flat during the trading day, but dipped 1.3% after hours following Moody's decision to downgrade the aluminum maker's credit to junk status, dropping it from Baa3 to Ba1. The ratings agency cited lower aluminum prices as the motivation for the downgrade, though it kept its outlook for the manufacturer at "stable." Alcoa has $8.6 billion in debt on its balance sheet, and has struggled recently in the face of low commodity prices and the slowdown in China's construction boom. Despite the broad market rally, Alcoa shares are down 2.5% this year.
Finally, after hours today, Berkshire Hathaway's (NYSE: BRK-B ) MidAmerican Energy said it would buy Nevada-based NV Energy (UNKNOWN: NVE.DL ) for $5.6 billion, sending NV's shares up 23%. The companies said the deal will combine MidAmerican's expertise in renewable energy with NV's solar and wind capabilities. Pending approval by regulators and NV shareholders, the acquisition should close in the first quarter of 2014. Berkshire's shares were essentially unmoved after hours.