Dow Plummets 316 Points, DryShips Slumps 10% as Sell-Off Intensifies

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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.

Sellers were out in force in the stock market today, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) logged its fourth straight day of declines. Though its losses were modest at the beginning of the week, the sell-off became more severe in the last two days, when the index lost a total of 494 points. Unexpected weakness in China's manufacturing sector sent stocks lower yesterday and, as emerging markets currencies lost ground today, that bearishness accelerated as investors fled to safe havens like treasuries and gold. By day's end, the Dow had plummeted 318 points, or 2%, to end at 15,879, in what amounted to the worst day for blue chips since last June. 

Only three Dow stocks were immune from today's bloodbath, and Walt Disney (NYSE: DIS  ) wasn't one of them. Shares of the entertainment giant slumped 2.8% Friday, bringing its losses to nearly 5% in 2014. Walt Disney stock is only now seeing the ugly side of last year's stellar 49.5% rally -- the ugly side being the psychological urge many investors feel to capture profits on their biggest gainers. In fairness, Disney shares, trading at 21 times earnings, also have some room to fall before they become the darling of value investors. Being a $125 billion company can have its disadvantages -- it's harder for businesses to grow rapidly the larger they get. 

Surprisingly, Chinese social media platform Renren (NYSE: RENN  ) was largely insulated from today's madness, adding 1.9% in trade. Not coincidentally, Renren also just agreed to sell the remainder of its stake in Nuomi Holdings, an e-commerce site, to China's Internet search giant Baidu. Terms of the deal weren't immediately available, but Renren was able to fetch $160 million from Baidu back in August for a 59% stake in Nuomi. That transaction valued Nuomi at around $270 million, so assuming the same valuation, the remaining 41% would be worth about $110 million, a substantial influx of cash for Renren, which itself is worth about $1.2 billion.

Greek drybulk shipper DryShips (NASDAQ: DRYS  ) , however, was anything but insulated from the market pullback today. Shares cratered 10.3% as a key gauge of shipping rates, the Baltic Dry Index, lost nearly 4% Friday. DryShips stock is more than twice as volatile as the overall market, and is largely at the mercy of the going daily rate to ship commodities and materials. Dryships also has quite a bit of debt on its books, making the stock all the more susceptible to downside risk.

The three Dow stocks dividend investors need
Market volatility like we saw today is not entirely unusual, and many investors would prefer a smoother, more stable ride. If you're looking for some steady, long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now, and get your copy today.

Read/Post Comments (1) | Recommend This Article (6)

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.

  • Report this Comment On January 25, 2014, at 3:06 PM, LDTEX3 wrote:

    Definition of 'Tulipmania'

    Tulipmania was the first major financial bubble. Investors began to madly purchase tulips, pushing their prices to unprecedented highs; the average price of a single flower exceeded the annual income of a skilled worker. Tulips sold for over 4000 florins, the currency of the Netherlands at the time. As prices drastically collapsed over the course of a week, many tulip holders instantly went bankrupt. Ref. Investopedia.

    Why are we buying stocks with a PE of 1300?

    I am old enough to remember PE's of > 40 being considered risky.

Add your comment.

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: 2809155, ~/Articles/ArticleHandler.aspx, 8/30/2015 6:54:27 PM

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...

John Divine

Fool since 2012, unique fingerprints since birth. Age 7: Put lifetime savings ($18.37!) in the bank, became disillusioned with low interest, and a fascination with the stock market was born.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%
DIS $102.48 Up +0.31 +0.30%
Walt Disney CAPS Rating: *****
DRYS $0.44 Down -0.01 -2.22%
DryShips, Inc. CAPS Rating: ***
RENN $3.24 Up +0.04 +1.25%
Renren Inc. CAPS Rating: *