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Can These 3 Hard-Hit Dow Jones Stocks Bounce Back?

By Dan Caplinger - Jul 6, 2020 at 6:22AM

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These stocks have lost the most so far in 2020. Here's what it'll take for them to rebound.

The stock market has seen extreme volatility so far in 2020, and even after a strong second-quarter performance, the Dow Jones Industrials (^DJI -0.03%) are still down almost 10% for the year. Although there've been a few stocks that have managed to buck the trend and gained ground, the vast majority of Dow stocks have given up ground.

Among the 24 losing stocks in the Dow at the halfway point of 2020, three stand out as being particularly noteworthy. As with all falling stocks, the big question investors have is whether these three giants of their respective industries can bounce back and recover some of their lost ground.

BA Chart

BA data by YCharts.

Boeing, down 44%

It should come as no shock to see Boeing (BA 0.45%) as the biggest loser in the Dow. Moreover, since it had the highest share price coming into 2020, Boeing's descent has had an outsized impact on the entire average.

Even before 2020 began, Boeing was under pressure from the nearly year-long grounding of its 737 MAX aircraft line. When the coronavirus pandemic hit, the aerospace manufacturer found itself suffering from a much larger downdraft, as airlines suddenly had to deal with a near-standstill in air traffic and went into financial-survival mode. Now, the 737 MAX has completed flight testing and could finally get back into the air. But there's still a lot of uncertainty about whether passengers will return to the skies. If airlines keep struggling, it could hurt Boeing's long-term future well beyond the rest of 2020.

Red and white Boeing aircraft taxiing away from three blue and white Boeing aircraft parked at gates.

Image source: Boeing.

ExxonMobil, down 37%

Equally unsurprising in the downturn, ExxonMobil (XOM -2.54%) managed to avoid the cellar of the Dow only by virtue of Boeing's even bigger decline. Oil prices hadn't exactly been strong at the end of 2019, but the onslaught of COVID-19-related business closures sent crude oil markets into panic. Even a brief period of negative oil prices showed just how much of a supply imbalance there was during key periods in March and April.

Oil prices have recovered somewhat, and ExxonMobil is off its worst levels of the year. Yet investors still have to worry about the likelihood that the energy giant won't raise its dividend in 2020, and some actually fear a cut could be in the works. If energy markets can recover, then the writedowns that ExxonMobil had to take recently could reverse themselves, and that could help send the entire sector upward in time.

JPMorgan Chase, down 34%

Many have compared the coronavirus pandemic's impact on the stock market to the financial crisis in 2008 and 2009, which hurt JPMorgan Chase (JPM -0.64%) quite hard. Even though government officials have been quick to reassure investors that the banking system is in much better shape this time around than it was more than a decade ago, bank stocks have dramatically underperformed the overall market.

Investors are fearful that the Federal Reserve will force banks to maintain greater capital requirements than in the past, and that in turn could hurt earnings that are already under pressure from a flat yield curve and rock-bottom interest rates. The Fed has also forced banks to suspend stock buybacks in the third quarter as well as keeping dividend payments unchanged. That seems to go against the notion that banks are all fine, and it could take a reversal of that regulatory move for JPMorgan to recover.

What's next for the Dow?

These three stocks are far from the only ones weighing on the Dow, but many investors are watching them as bellwethers of the broader economy. For the Dow to reach new highs, market participants will need to see JPMorgan, ExxonMobil, and Boeing show signs of getting over all their challenges.

Dan Caplinger owns shares of Boeing. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
BA
$170.76 (0.45%) $0.77
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$121.35 (-0.64%) $0.78
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$91.61 (-2.54%) $-2.39
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,749.65 (-0.03%) $-11.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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