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Biggest Dow Losers of Last Week: Jan. 27-31

By Matt Thalman – Feb 1, 2014 at 5:00PM

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An in-depth look at what caused a few stocks to become this week’s worst performing Dow components.

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.

January is in the books, and the major indexes really dug themselves a hole to start the year. In the latest bad week on Wall Street, the Dow Jones Industrial Average (^DJI -1.03%) lost 180 points, or 1.13%, while the S&P 500 fell 0.43%, and the Nasdaq slid 0.58%. With only one week in January in the black, the Dow is down 877 points, or 5.29%, year to date. Its peers didn't fare much better for the month, with the S&P down 65 points, or 3.55%, to start out the year and the Nasdaq down 72 points, or 1.74%. The S&P, like the Dow, marked just one week in positive territory in January, while the Nasdaq managed two weeks.

The big macro news this past week was the Federal Reserve's decision to continue tapering, with the announcement that it will reduce its asset purchases to $65 billion in February, down from $75 billion in January and the $85 billion it had been buying every month before that. We also got the second installment of the third-quarter gross domestic product figure, which came in at 4.1% growth, compared with to the 3.2% the first reading indicated. And we heard a number of consumer sentiment and confidence reports, all of them indicating that confidence levels are high but that consumers may not as optimistic as they were in December. 

Before we get to the Dow's biggest losers of the week, let's look at its top performer, Caterpillar (CAT -1.84%), which rose 8.98%. Shares began to rise on Monday after the company reported earnings and never looked back. Although revenue dropped 10% during the quarter, net income was much higher than Wall Street was expecting. The board also approved a $10 billion share-buyback program, and management said it's starting to see an improving world economy. 

Last week's big losers
Procter & Gamble
(PG 0.13%) closed the week 3.23% lower, enough to make it the Dow's third worst performer of the week. There was very little negative news pertaining to the company, but a number of investors have been mentioning how overpriced the stock looks. Shares of this slow-growing consumer-goods giant are currently trading at 20.5 times past earnings, or 16.5 times future expected earnings -- reasonable for a high-flying tech stock, perhaps, but not for a company with just 2% revenue growth. The stock does pay a stable and reliable 3% dividend yield, but income investors continue to rotate out of dividend-paying stocks in anticipation for higher Treasury yields, as the Federal Reserve continues its tapering and allowing rates to slowly rise.

Coming in second place, after falling slightly more than 4%, is Chevron (CVX -2.58%). The big decline came on Friday, after reporting a 4% revenue drop and a 32% net earnings decline compared with the same quarter last year. Management said lower production and weak global fuel costs played a large role in the results. To counteract these types of problems in the coming year, management is looking to cut some $2 billion from its expenses. A high amount of uncertainty about where fuel prices and production levels will be six months to a year from now had investors concerned about the company's future earnings. Those are the types of risk that oil and gas investors always need to watch out for.  

Finally, this past week's biggest Dow loser was Boeing (BA -3.60%), as shares fell 8.33%. Boeing also reported earnings this week, and while revenue of $23.8 billion and earnings per share of $1.88 were both better than what the company posted last year, investors were disappointed with management's future guidance. The company is forecasting revenue growth of 1%-2% in 2014, which is not something an investor who bought shares at a valuation of 23 times earnings wants to hear. The expected slow growth in the coming year may continue to have an effect on Boeing, but if you bought shares based on the idea that the company has hundreds of billions of dollars in its backlog, you should sit tight and ride out this pullback.  

The other Dow losers this week:

  • 3M, down 1.55%
  • American Express, down 2.22%
  • AT&T, down 0.29%
  • Cisco, down 1.3%
  • ExxonMobil, down 2.83%
  • Goldman Sachs, down 2.1%
  • Home Depot, down 2.91%
  • Intel, down 1.08%
  • International Business Machines, down 1.64%
  • Johnson & Johnson, down 2.36%
  • McDonald's, down 0.27%
  • Coca-Cola, down 2.62%
  • Travelers, down 0.4%
  • Visa, down 2.63%
  • Walt Disney, down 0.15%

Matt Thalman owns shares of Home Depot, Intel, Johnson & Johnson, and Walt Disney. The Motley Fool recommends 3M, American Express, Chevron, Cisco Systems, Coca-Cola, Goldman Sachs, Home Depot, Intel, Johnson & Johnson, McDonald's, Procter & Gamble, Visa, and Walt Disney and owns shares of Coca-Cola, Intel, IBM, Johnson & Johnson, McDonald's, Visa, and Walt Disney. 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.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,596.34 (-1.03%) $-350.76
Boeing Stock Quote
$178.43 (-3.60%) $-6.67
Caterpillar Stock Quote
$228.29 (-1.84%) $-4.28
Procter & Gamble Stock Quote
Procter & Gamble
$149.28 (0.13%) $0.19
Chevron Stock Quote
$172.01 (-2.58%) $-4.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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