After falling 136 points on Monday, the Dow Jones Industrial Average (DJINDICES:^DJI) reversed course Tuesday, Wednesday, and Thursday, when it rose by more than 365 points, yet it still managed to end the week on a down note as the blue-chip index lost 114 points on Friday. But despite moving lower two of the five days by more than 100 points each session, the Dow still came out ahead for the week, by gaining 110 points, or 0.74%. The other major indexes also closed higher for the week, as the S&P 500 added 13.85 points, or 0.87%, and the Nasdaq increased by 1.37%.
Before we hit the Dow losers, let's look at this week's best performing component: Home Depot, whose shares rose by 4.94% this past week. On Thursday the National Association of Realtors reported that pending home sales hit their highest level in more than six years in May. This is just the latest economic data indicating that the housing market is strengthening, as earlier in the week the Case-Schiller index showed that home prices rose another 2.5% in April. Further, of the 20 cities the index tracks, only one, Detroit, experienced a price decline, while a number of areas experienced gains of as much as 20%. Both of the reports this week were great signs for both the U.S. economy and the home-improvement retailer.
The big losers
The Dow's biggest loser of the week was also its heaviest-weighted stock, IBM (NYSE:IBM), which lost 2.26% this past week. The bulk of IBM's decline came on Friday, on news that didn't directly pertain to the technology giant. An IBM competitor, consulting firm Accenture, announced earnings and reported revised full-year guidance on Thursday after the markets closed, but since the guidance was lower than it previously disclosed to investors, shares of both companies moved lower on Friday. Not only was Accenture's guidance not what analysts wanted to see, but the company also reported sales and income below estimates. Since the two companies are competitors, investors sold off IBM because of the fear that Big Blue may also report lower-than-expected results during its upcoming earnings announcement on July 17.
For the fourth week in a row, shares of Alcoa (NYSE:AA) have moved lower. This past week, the aluminum company lost another 2% of its value, and the stock has now fallen 8% in June alone. This past week, the company became the most shorted Dow stock, taking the title from Intel. Investors have been putting downward pressure on the stock as commodity prices worldwide continue to move lower, and on news this past week that the Chinese government is going to begin cracking down on easy money and free-flowing credit throughout the country. That move will probably slow construction and development projects throughout the nation, which in turn will lower demand for Alcoa's product, aluminum.
The only other two Dow stocks that fell more than 1% this past week weren't surprising. They're competitors the same industry and competitors: Merck (NYSE:MRK) and Pfizer (NYSE:PFE). Merck lost 1.17% while Pfizer fell 1.58%, as each company was hit with its own mix of problems. Early in the week, a federal court denied Pfizer protection from asbestos lawsuits. The issue stemmed from a subsidiary called Quigley, which Pfizer has owned since 1960 and had sold asbestos-containing products from 1940 to 1970. Later in the week, Pfizer settled all claims with a judge's approval for $964 million.
Merck primarily lost its way this week on Friday, when the European Medicines Agency authorized two generic versions of the company's rheumatoid arthritis medication, which it sells in conjunction with Johnson & Johnson, called Remicade. The drug is a monoclonal antibody, which is difficult to produce and some say can't accurately be replicated by generic companies. Many had believed this would help the big pharma companies fend off the generic versions, but this move by the EMA has blown that theory out of the water. Remicade is J&J's top-selling product, so if the generic companies move in on the market, both Merck and J&J will probably see a big impact on their revenue and profits.
The other Dow losers this week:
(For more information on why shares of the other losers were lower this past week, click on the link company.)
- 3M, down 0.21%
- Cisco, down 0.57%
- Chevron, down 0.77%
- Procter & Gamble, down 0.56%
- General Electric, down 0.72%
- DuPont, down 4.13%
- Caterpillar, down 0.75%
Fool contributor Matt Thalman owns shares of Johnson & Johnson. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513.
The Motley Fool recommends 3M, Accenture, Chevron, Cisco Systems, Home Depot, Intel, Johnson & Johnson, and Procter & Gamble and owns shares of General Electric, Intel, IBM, and Johnson & Johnson. 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.