The new year is young, but 2024's stock market themes are already starting to develop.
Investors have grown more skeptical that the Federal Reserve's interest rate cuts will happen as fast as they had hoped. December's unemployment was slightly stronger than expected and the top-line inflation rate reaccelerated, with the Consumer Price Index increasing to 3.4% from a year ago.
Through Jan. 11, eight sessions into 2024, the Dow Jones Industrial Average was essentially flat, up just 0.06%.
Let's take a look at the three worst-performing stocks on the Dow to see if any are worth buying today.
Image source: Getty Images.
1. Boeing (down 14.6%)
It's probably not surprising to find Boeing (BA 0.25%) at the top of this list. The aircraft manufacturer is embroiled in yet another scandal after a panel on a Boeing 737 for Alaska Airlines blew out mid-flight last week.
Boeing has gone into damage-control mode in an attempt to preserve its reputation, but the company already grounded its 737 MAX planes for several months after two crashes just months apart in 2018 and 2019.
It's unclear how the latest crisis will affect Boeing's business, but the company is likely to spend more to improve its quality assurance, address reputational concerns, and deal with regulatory oversight. There's a risk of losing more business to rival Airbus.
Boeing's revenue plunged after its 737 MAX planes were grounded in 2019. Its revenue has started to rebound but is still far below its peak before those crashes.
The latest Alaska Airlines emergency landing is likely to put pressure on that comeback. At this point, Boeing stock seems best avoided, considering oversight for the company is only likely to increase in the wake of the latest incident.
2. Walgreens Boots Alliance (down 8%)
Walgreens Boots Alliance (WBA 0.57%) has been a perennial laggard on the Dow, so perhaps it's not a surprise to see the drugstore chain on this list again.
Walgreens reported its fiscal first-quarter earnings earlier this month, and the company beat estimates on the top and bottom lines. However, earnings were down sharply with adjusted earnings per share falling 43% year over year to $0.66 due to "challenging retail market trends" and a higher tax rate.
The real reason the stock plunged was that the company cut its dividend by 48% to $0.25 a share. Cutting the dividend is the company's latest effort to cut costs, preserve cash, and improve returns, and management said, "We are evaluating all strategic options to drive sustainable long-term shareholder value, focusing on swift actions to right-size costs and increase cash flow."
Given the company's ongoing problems and the sharp decline in its dividend yield, which was arguably the best reason to own the stock, Walgreens still looks like a no-go.
3. Intel (down 5.2%)
Unlike the other two stocks on this list, there's been no major news out on Intel (INTC -9.20%). The stock fell sharply in the first session of the year on a broader sell-off in the market around fears that interest rates could remain elevated longer than expected.
Since then, the stock has been mostly flat, but that performance has notably lagged Nvidia, the current star of the semiconductor sector thanks to its prowess in artificial intelligence (AI) chips.
Nvidia also introduced a new set of AI PC chips designed to compete with Intel's PC chips. The move could put pressure on Intel to respond or play defense in PC chips. That's a different narrative than investors had been thinking with Intel. Shares gained last year as it was expected to challenge Nvidia in AI chips.
Intel's core business serving PCs is still weak due to the industrywide slowdown in PC chip sales, and the company will need a catalyst to improve its business in 2024.
If its AI program disappoints, the stock could head lower.
