Last Week's Worst Performing Dow Components

After a week that was packed full of key economic reports and a Federal Reserve meeting, the markets ended on a surprisingly high note. Both the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 set new all-time highs on a number of days this past week and closed the last five days of trading higher by 0.64% and 1.06%, respectively. The Dow now sits at 15,658 while the S&P 500 rests at 1,709, both all-time highs, while the Nasdaq increased the most last week, 2.11%.

Most of the economic data released last week was strong and indicated that the economy is still moving down the road to recovery -- but perhaps not quite as fast as the Federal Reserve would like to see, which was why the Fed chose to simply tell investors that it will continue its stimulus programs. Interest rates didn't make any dramatic moves higher in light of the news, nor did stocks decline by any meaningful amount.  

Before we hit the Dow losers, let's look at this week's best performing component. Although widely known and recognized as a chemical company, DuPont (NYSE: DD  ) moved higher by 3.92% after the company announced that it had closed the acquisition of seed producer Pannar. South Africa, Pannar's home base, had been resistant to the takeover attempt, causing the buyout to ultimately take three years to complete.  

The big losers
Both of the Dow's big oil conglomerates made the losers list this week, as Chevron (NYSE: CVX  ) lost 2.04% and ExxonMobil (NYSE: XOM  ) slid lower by 2.99%, the latter taking the crown as the worst Dow component of the week. The declines came as a result of poor second-quarter earnings results for both. On Thursday, Exxon reported revenue of $106.47 billion and earnings per share of $1.55 after analysts were expecting revenue of $105.54 billion and EPS of $1.90. On the surface, that doesn't seem outrageously terrible, but it does when you compare Q2 2013 results with Q2 2012 revenue of $127.36 billion and EPS of $3.41. Even though analysts were expecting a much weaker quarter than last year and the Exxon beat on revenue, the big earnings miss is something investors take seriously. This showing may also be an indication that the best days for a company that until recently held the title of the "world's largest company" may be over. 

As for Chevron, the Q2 report wasn't good, but it did beat Exxon's. Chevron reported revenue of $57.37 billion and earnings per share of $2.77. Revenue fell 8.4% from a year earlier, while EPS declined 24%, but when compared with Exxon's 16.4% sales slide and 54% profit decline, Chevron looks strong. Both companies were hurt by their downstream segments and shrinking margins, as costs rose throughout their businesses.  

Verizon (NYSE: VZ  ) came in third this week on the losers list, as the stock declined 1.5% over the past five trading days. The company is beginning to feel pressure from the smaller telecommunications companies in the U.S. as they attempt to move in on Verizon's business by offering lower rates and shorter blackout periods for phone upgrades, causing the industry leader to act more like a follower. Verizon and AT&T both have announced that they'll also offer programs to allow customers to upgrade phones more frequently than every two years, but this move will certainly hurt margins, and that's probably causing investors in both companies some headaches.

We also saw Verizon get some push back from the telecoms to the north this week, as the established Canadian companies are fighting government regulations that would give an outsider such as Verizon the upper hand when attempting to move in on the telecom industry in Canada. To give its residents more choices when shopping for a provider, the current law gives outsiders a slight advantage when it comes to buying spectrum in the country. Canada's established companies are fighting to have the law changed and level the playing field. If that happens, Verizon may face a more costly growth route or cancel its Canadian expansion plan altogether.  

The other Dow losers this week:

(For more information on why shares of the other losers fell lower this past week, click on the following links.)

More Foolish insight
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  • Report this Comment On August 03, 2013, at 8:03 PM, joeddins wrote:

    I wonder how much the high price these two oil companies paid for the natural gas acquisitions they made is hurting today ?

    Joe Eddins

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