The Dow Jones Industrials (^DJI) finished Tuesday with a gain of 129 points, hitting a new all-time high and falling just short of hitting the 17,000 level at one point during the trading day. Most market participants attributed the gains to favorable data from the manufacturing sector, and the monthly phenomenon that often sends stocks rising on the first trading day of the month might have played a role in the advance as well. The S&P 500 also set a new record in a fairly broad-based rally, but several stocks nevertheless missed out on the positive day, with Goldman Sachs (GS) and DuPont (DD) among the more notable declining stocks today.
Goldman Sachs fell by about 0.4% on Tuesday, with the Wall Street giant dealing with news on a number of fronts. The Dow component got fined $800,000 by the Financial Industry Regulatory Authority over alleged violations related to dark pools, and although the money award is inconsequential, the episode further worsens Goldman's reputation on an increasingly controversial area for the brokerage industry. Reports of workforce reductions in the fixed-income arena appear imminent, with the bond market having become too quiet for Goldman Sachs to earn as much as it did in the past in more turbulent credit-market environments. Meanwhile, some believe that Goldman Sachs might buy an online discount brokerage firm to try to broaden its appeal, reaching out to an audience that has historically seemed like far from a perfect match for the upper-crust financier firm. Whatever it does, Goldman has to find a way to foster growth even in a hostile regulatory environment.
DuPont dropped just a few pennies today, but the chemical company has had to deal with a lot of turmoil recently. A profit warning late last month showed that even DuPont's much-heralded agricultural segment is vulnerable to downturns, with the company having bet wrong on the size of the spring's corn planting and therefore finding itself with high levels of corn-seed inventory. More broadly, investors have waited patiently for more details on how DuPont plans to split off its performance-chemicals business from the rest of its operations, with some noting that the reduction in DuPont's size could lead the managers of the Dow Jones Industrials to take the company out of the average if it shrinks too far.
It's reasonable for companies not to participate in overall gains for the Dow Jones Industrials on any given day. In the longer run, though, investors should keep an eye on DuPont, Goldman, and other laggard stocks to make sure that structural flaws aren't what's holding back their shares from advancing with the Dow.