Why Boeing, Home Depot, and Wal-Mart Pulled the Dow Down Last Week

The Dow suffered a setback for the first time in a while, and these stocks helped stop a record run for the average.

Jun 14, 2014 at 5:02PM

The Dow Jones Industrials (DJINDICES:^DJI) did something they haven't done in a while this week: post two triple-digit losing sessions on the way to a 150-point loss on the week. Even though the decline represents less than a 1% pullback on the Dow, it's still the worst weekly performance the Dow has had since early April, showing just how impressive the stock market's bull run has been during the second quarter. Among the biggest decliners this week were Boeing (NYSE:BA), Home Depot (NYSE:HD), and Wal-Mart (NYSE:WMT).

Source: Boeing.

Boeing fell more than 4% as the aerospace giant faced the twin prospects of a slower global economy and industry-specific headwinds as well. Boeing has benefited greatly from the rise of the airline industry, which has emerged from decades of weak performance and consistent bouts of bankruptcy filings to become immensely profitable. But even high-flying airline stocks have started to show some weakness as the bull market ages, and the pace of new orders has been so strong in recent years that it'd be almost impossible for Boeing to keep it up for the foreseeable future. Boeing's long-term prospects still look promising, but they're contingent on the airline industry figuring out how to perpetuate its recent success rather than falling back into their old money-losing patterns.


Home Depot dropped 3% as investors weighed the potential impact of economic sluggishness on the housing market. Interest rates have been stubbornly low so far in 2014, and that has helped keep mortgage rates down and make housing more affordable for would-be homebuyers. That in turn should help support Home Depot's growth, especially in light of pent-up demand from shoppers who had to delay gardening and home-improvement projects due to the long winter. Yet nervousness that rates will eventually have to rise and that the housing market could finally start to see some weakness creep in weighed on the stock this week, and investors will simply have to wait for the home-improvement retailer's next earnings report to see if Home Depot can keep bucking the trend and finding new ways to grow.

Wal-Mart gave up about 2.5%, with one of the factors being possible consolidation in the deep-discount retail space. Carl Icahn targeted a prominent dollar-store chain by taking a 9% in the company, seeing the potential for dollar stores to challenge traditional discount department stores like Wal-Mart. That strategy has some merit, especially in light of the challenges that Wal-Mart has had in an economic environment that should actually play to the retailer's strengths. If Wal-Mart keeps facing challenges from both sides of the income spectrum, then it could find itself squeezed out, and the company needs its efforts on the e-commerce front to bear fruit in order to fend off competition from that angle as well.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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