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Dow Components McDonald's and Chevron Fall, While Rite Aid Continues Climbing

By Matt Thalman – Jan 8, 2014 at 9:00PM

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Major indexes finish the day split despite a better-than-expected ADP jobs number.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Despite a job report that beat expectations, the major indexes finished the day mixed. The Dow Jones Industrial Average (^DJI 0.43%) ended the day down 68 points, or 0.41%, and the S&P 500 lost 0.02%, while the Nasdaq gained 0.3%.

The ADP private-sector job report showed that 238,000 jobs were created in December, beating analysts' expectations of 200,000. The minutes from the Federal Reserve's latest meeting came out today, too, and though they didn't paint the rosiest picture of the economy, they didn't make it appear to be disastrous, either. Perhaps the mixed sentiment on Wall Street came from anticipation over Friday's jobs report, which will certainly affect the Fed's decision-making in the coming months.

Two stocks contributing to the Dow's decline were McDonald's (MCD 0.13%) and Chevron (CVX 0.95%), which fell 1.01% and 1.42%, respectively.

The drop at McDonald's came after Wells Fargo analyst Jeff Farmer, citing slowing sales, downgraded the stock from "outperform" to "market perform." Farmer noted that McDonald's has lost market share within its industry in three of the past four months and said the trend is expected to continue into 2014. 

Chevron, meanwhile, dropped after a downgrade this morning, from "sector outperform" to "sector perform," from the firm Howard Weil, which specializes in the energy industry. The previous rating of sector outperform was cut to sector perform. That's certainly one reason Chevron did worse than fellow Dow component ExxonMobil (XOM 0.49%), which ended the session down only 0.33%.  

It also didn't help Chevron that crude oil lost another 1.43% today. The volatile commodity has fallen 4.79% over the past month and 8.41% since the start of September. The oil business is difficult enough to operate in, with most projects costing millions, if not billions, in start-up capital and taking years to pay themselves off. With the price of crude in constant fluctuation, planning a few years down the road is simply a guess.

Outside the Dow, one upgrade helped shares of Rite Aid (RAD 0.47%) rise by 6.4%. JPMorgan Chase analyst Lisa Gill boosted the stock from "neutral" to "overweight" and increased the price target from $6 to $6.50. She believes Rite Aid will benefit from new generic-drug launches expected in the next few years and from an increase in the number of filled prescriptions as more Americans get health insurance under the Affordable Care Act. Gill also said Rite Aid's turnaround efforts and its loyalty program have had a positive impact, and she expect those trends to continue.  

Whether you agree with these upgrades and downgrades, remember that they're just the opinions of a few analysts. Always weigh various opinions before you make a buy or sell call. A Wall Street analyst's view shouldn't carry more weight than anyone else's.

Fool contributor Matt Thalman owns shares of JPMorgan Chase. 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 Chevron and McDonald's and owns shares of JPMorgan Chase and McDonald's. 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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