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Pulled Down by a Few Big Losers, the Dow Closes in the Red

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Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

With Syria, a lower consumer sentiment report and, of course, Fed tapering on the minds of investors, the major markets all closed lower for the day and the month of August.

Today, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) ended lower by 30 points, or 0.21%, and now sits at 14,810. The S&P 500 lost 0.32% today, while the NASDAQ moved lower by 0.84%. For the month, the Dow ended down 689 points, or 4.44%, while the S&P 500 fell 3.14%, and the NASDAQ ended lower by 1.02%. All the major indexes ended both the day and the month as losers; let's stick with that theme and look at a few of the big blue chip losers today.

Shares of McDonald's (NYSE: MCD  ) lost 0.53% of their value today. The total cost of the recent walk-out that employees staged earlier in the week is unknown. It's also unknown whether the fast-food companies will give in to the demands for higher wages and the right to unionize. But it's hard to imagine the walk-out didn't cost the company in terms of lower sales that day. Investors should keep an eye on how this plays out; if the company gives in to the demands of the workers, it will surely hurt margins.

Alcoa (NYSE: AA  ) was the big loser on the Dow today, as the company lost 1.41% of its value, and is now down 11.29% year to date, making it the worst performer of 2013. The move lower today came after a report was released by JPMorgan Chase that stated that, based on their analysis and predictions, two-thirds of the world's aluminum producers would lose money if the London Metal's Exchange changes the way warehouse inventories are accounted for. Many have argued that warehouse owners are using unfair rules to keep the price of metals high, although supply is higher than demand. JPMorgan believes that the price of aluminum would drop to around $100 per metric ton, a substantial decrease from the current $250 per ton that the metal is trading at. The LME is set to vote on the changes in October, and many believe they will be approved. 

Shares of Verizon (NYSE: VZ  ) fell 0.92% today, after having a great session yesterday during which shares rose 2.71%. But, the two moves are probably closely tied. The move on Thursday came as the result of news that Verizon was in talks with Vodafone about purchasing its 45% stake in Verizon Wireless for a whopping $130 billion. While the initial reaction from most Verizon investors was a good one, further examination of how this deal would actually work, and what it would ultimately mean for Verizon, likely caused shares to fall. Yesterday, I mentioned this deal would give Verizon full control of the company and its profits, but it would also load the company up with as much as $60 billion in extra debt. It would also cost the company it's A- credit rating, and possibly dilute current shares, as many believe the deal would include Verizon stock. This would put the business in a situation where it may not have the cash to begin any new system upgrades for a few years. Investors should be both excited and nervous about the possible deal, which is likely the cause for the fluctuating stock price the past two days.

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DOW 18,333.83 190.38 1.05%
S&P 500 2,169.41 18.28 0.85%
NASD 5,313.23 44.08 0.84%

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Related Tickers

9/30/2016 11:29 AM
^DJI $18330.72 Up +187.27 +1.03%
AA $10.04 Up +0.08 +0.80%
Alcoa CAPS Rating: ***
MCD $115.50 Up +0.71 +0.62%
McDonald's CAPS Rating: ***
VZ $52.42 Up +0.30 +0.57%
Verizon Communicat… CAPS Rating: ****