Spanish financial troubles spooked investors across Europe, forcing Italy to put a week-long ban on short selling its own financial institutions. U.S. markets reacted about as poorly as one would expect, with the Dow Jones Industrial Average (INDEX: ^DJI) faring the best, losing 101 points or 0.79%, while the S&P 500 tumbled 0.89% and the Nasdaq dropped 1.20%.

However, it wasn't just macro events that soured the markets, as company-specific problems including poor earnings rocked these stocks. Let's take a closer look at the Dow's three worst performers and then several other companies that tanked worse than the famous index.


Daily Performance

YTD Performance

Closing Share Price

McDonald's (NYSE: MCD) (2.88%) (10.03%) $88.94
Microsoft (Nasdaq: MSFT) (2.77%) 14.29% $29.28
Kraft (2.39%) 6.55% $39.20

Source: Yahoo! Finance.

The eurozone death crawl isn't just an abstract problem. It can hit companies squarely in the gut, as McDonald's found out. The fast-food giant does 40% of its business in the Old World, and the turmoil is affecting consumers' habits along with giving McDonald's an unfavorable currency position. This is still a great business built for long-term investors; however, the near term is in a rough patch.

Kraft was also seemingly down on Europe's troubles as well, as the food conglomerate gets about a third of its revenue from the region. Kraft is splitting into a domestic and an international-focused company, so Europe's importance will shift to more than 50% of the new international company's market.

Meanwhile, Microsoft entered into a settlement with NTP for an undisclosed amount of money. NTP dinged Research In Motion to the tune of $612 million in 2006 in a patent-infringement lawsuit, so this could be more than chump change. No matter the payout however, Microsoft should easily absorb the hit with the help of its $62 billion cash hoard.

Finally, two other Dow components, Johnson & Johnson and Pfizer (NYSE: PFE), are down after hours, as their Alzheimer's drug Bapineuzumab failed its first phase 3 trial. Although there are still three trials left, investors should probably write of this would-be blockbuster. Its early-stage results weren't great, but the potential rewards made pushing it forward through development make sense. The company really taking a beating is Elan (NYSE: ELN), down more than 18% after hours. Success would have been transformative for the small pharma, but Alzheimer's treatment is a graveyard of failure, and as mentioned before, the early returns weren't amazing. Still, this sell-off may be a buying opportunity for Elan, which does have Tysabri on the market and other drugs in its pipeline.

It also underscores the importance of having large caps with solid dividends in your portfolio. Both J&J and Pfizer are down less than 1% on the disappointment. Fortunately, the Dow is loaded with companies with solid dividend payouts and highly sustainable business models built for the long haul. The Motley Fool's new special free report, "The 3 Dow Stocks Dividend Investors Need," all have an X factor that makes them stand out from their illustrious peers. Download the report free for a limited time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.