Energy Sends the Dow Down Triple Digits As Exxon Mobil, Chevron Weigh

The Dow Jones Industrials were looking good early in the day, but energy stocks sabotaged a solid performance.

Jun 24, 2014 at 9:02PM

The Dow Jones Industrials (DJINDICES:^DJI) went from riches to rags Tuesday, closing with a loss of 119 points on the day. The Dow initially started off the day by climbing into prospective record territory on positive economic data reports. Yet even though investors temporarily cheered better consumer confidence and a healthy housing market, energy stocks ended up leading the charge downward in the afternoon hours, and ExxonMobil (NYSE:XOM) ended up leading all losing stocks in the Dow while Chevron (NYSE:CVX) weighed in with less extensive declines.


Oil prices weren't the reason the oil stocks in the Dow Jones Industrials gave up ground today. Oil did decline slightly, but West Texas Intermediate remained above the $106 level, and geopolitical tension in the Middle East remains troublesome enough to support oil prices at least pending a longer-term resolution.


One factor that's affecting both Chevron and ExxonMobil is the need to pursue international opportunities for growth that open up the companies to potential pitfalls. For instance, ExxonMobil is in talks with Turkish officials about potentially exploring for shale gas, but the nation's proximity to northern Iraq makes it a potentially dangerous place to consider exploration. Meanwhile, in Norway, Exxon could face a strike that would result in the loss of production from some of the energy giant's offshore oil-production platforms. Chevron faces similar challenges with its extensive assets, which range from Australia to the coasts of Africa and South America, and its landmark environmental case against Ecuador show the potential dangers of missteps in foreign jurisdiction -- despite the case's favorable outcome.

But looking beyond the oil stocks in the Dow Jones Industrials, you can find much bigger losses among smaller exploration and production companies. That suggests a broader sector rotation out of energy, which is a common tactic that short-term traders use to squeeze out gains from a particular area of the market before moving on to better prospects elsewhere.

Looking at the long-term trend among energy stocks, today's move downward barely puts a dent in the extensive upward momentum that the energy sector has built up over the past several months.

CVX Chart

Chevron and Exxon data by YCharts.

Chevron and Exxon have risen 15% to 20% since February's lows, reflecting the perception of their being value stocks as well as the strength in oil prices during the time period. In that perspective, overreacting to a 1% move downward is a short-sighted analysis of the situation.

The Dow Jones Industrials rely greatly on the energy markets, and so the direction that the Dow's energy stocks move in can bring the entire average with them. For now, though, a single day's declines don't justify any sense of panic among long-term investors.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chevron. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers