The Dow Jones Industrial Average (DJINDICES:^DJI) took investors for a ride again this past week. The index opened Monday morning at 13,092 and at the closing bell on Tuesday had risen to 13,245, up 1.16% in just two trading days. The things went south. As the markets opened on Wednesday morning and a wave of information hit investors, the sell-off started. In two days, the markets lost 431 points, or 3.2%. On Friday, the Dow closed up a mere 4 points at 12,815 and lost 2.11% during the week. This marks the third straight week in which the Dow moved lower.
Before we get to the big losers, I would like to point out that Boeing had a fantastic week. From the opening on Monday morning till the close on Friday, shares were up 4.83%. The company received a number of orders this week for its 737 Max airplanes and now has pre-sold more than 1,000 planes this year. Anyone who owns shares beat the Dow by nearly 7% this week.
But not all the Dow components were so lucky this week. A number of stocks ended the week down more than 4%.
So why are they down?
UnitedHealth Group (NYSE:UNH) was one of the biggest Dow losers this week, as the stock shed 5.97% of its value. Now that the Obama administration has been re-elected, the Affordable Care Act will remain in place. The insurers now will have to comply with the law and cover a wider range of individuals, leaving the companies vulnerable to more risk. While more people will have health insurance and begin paying into the system at a younger age, profits will be offset by a higher number of very expensive customers that the insurance companies now must also cover.
With oil inventories rising and the price of crude dropping like a rock this week, the oil companies have also felt the market's pain. The oil giant ExxonMobil (NYSE: XOM) watched its share price lose 3.14% during the five trading days this week. While last week rival Chevron (NYSE: CVX) was on this list after it lost 2.5%, this week the company is down only 1.76%. Although the stock price is still down, it happens to look good when compared with the Dow's 2.11% drop.
The oil industry wasn't the only one that took it on the chin this week. The Dow financials, Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE: JPM), both lost just slightly more than 4% during the week. Looking back now, the fact that Bank of America closed the week down only 4% seems shocking. On Tuesday the stock closed at $9.94, and by Wednesday's closing bell the share price was $9.23, a 7.14% drop. The head of the European Central Bank, Mario Draghi, stated on Wednesday that Europe was worse off than initially expected, and then on Thursday he said it would no longer give support to Greece and the bailout of the struggling country. He said the nations of the European Union would need to step in if Greece needed additional support. This news, as well as Fitch Ratings' warning to the U.S. government that it must agree on a solution to the fiscal cliff or its credit rating will be downgraded, hurt the banking stocks dramatically.
The Dow telecom industry also took a few hits this week, with Verizon (NYSE: VZ) dropping 4.07% and AT&T (NYSE:T) shedding 3.8% during the past last five trading days. The industry took a hit from Hurricane Sandy after the storm knocked out and disabled a number of cellular towers. Repair costs and lost service will have an impact on the next quarterly earnings for each company, but the high dividend yields should keep most of the shareholders from fleeing the scene.
Lastly, the largest Dow loser this week saw shares drop 7.38% after the company announced solid quarterly earnings. Walt-Disney (NYSE: DIS) posted earnings after the bell on Thursday, and although the company gave investors a 14% rise in net income, they missed analysts' estimates for revenue. Additionally, lower TV ad revenue and a warning to investors that costs are rising scared short-sighted shareholders away on Friday. The company's long-term prospects may be stronger than ever with the new Lucasfilm deal.
While McDonald's (NYSE:MCD) didn't have quite as bad of a week, losing only 2.41%, the company did miss monthly year-over-year same-store-sales growth in October for the first time since March 2003. One analyst noted that this October had one less weekend than last October, indicating he believed the sales miss was a one-time thing. But on the other hand, the price drop during this week may be a sign of things to come. Until McDonald's begins to regularly show up on this list, shareholders should sit tight, unless their investing thesis has recently changed.
Matt Thalman owns share of Bank of America and JPMorgan Chase. The Motley Fool owns shares of Bank of America, Walt Disney, JPMorgan Chase, McDonald's, UnitedHealth Group, and ExxonMobil. Motley Fool newsletter services recommend Chevron, Walt Disney, McDonald's, AT&T, and UnitedHealth Group. 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.
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