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Today's 3 Worst Stocks in the S&P 500

By John Divine – Feb 3, 2014 at 7:10PM

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From telecom to finance to consumer goods, not one sector could escape today's Wall Street bloodbath.

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.

More than eight in 10 stocks lost ground today, as Wall Street lamented weak January U.S. manufacturing numbers. Although it's easy to blame weak domestic production on the lousy weather -- there's been plenty of that going around -- the ISM Manufacturing Index missed consensus estimates so emphatically that even Mother Nature couldn't have been solely responsible. Bloomberg's consensus estimate for the manufacturing index called for a reading of 56, while the actual number came in at 51.3. Wall Street was promptly feasted upon by bears. The S&P 500 Index (^GSPC -0.17%) lost 40 points, or 2.3%, to end at 1,741. 

$4 billion telecom provider Frontier Communications (FTR) ended as one of the steepest decliners on Monday, losing 5.6% by day's end. The company is in a brutal business, one dominated by a handful of fiercely competitive corporate giants that dwarf the size of Frontier Communications. On top of that, the company has loads of debt on its balance sheets, and pays an 8.5% dividend that looks dangerously unsustainable. That said, shares were up nearly 3% after-hours on news that Frontier was taking the bureaucratic steps necessary to acquire AT&T's Connecticut "wireline, broadband, and video operations," according to a press release.

While Frontier's after-hours rebound gave some solace to investors, stock in E*Trade Financial (ETFC) wasn't bouncing back in late trading. Shares of the online broker slumped 4.9% today; the financial sector as a whole was off about 2.4%. With nothing particularly negative in the news Monday, investors may simply be mourning the absence of the famed "E*Trade Baby" from last night's Super Bowl ad spots. E*Trade's ads featuring a witty, financially sophisticated talking baby raving about his favorite online broker have been some of the most memorable Super Bowl ads in recent years, but the baby was conspicuously absent from last night's advertising extravaganza.

Lastly, shares of Johnson Controls (JCI -0.43%) fell 4.5% Monday, as the auto parts manufacturer was also partially the victim of a sell-obsessed markets. The consumer goods sector lost 2.4% today. Johnson Controls stock certainly wasn't boosted by the unexpected drop in U.S. manufacturing last month, and since the stock tends to be a bit more volatile than the market at large, this looks like a case of some ambitious Wall Street extrapolation.

John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool has no position in any of the stocks mentioned. 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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Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,951.02 (-0.17%) $-6.61
E*TRADE Financial Corporation Stock Quote
E*TRADE Financial Corporation
ETFC
Frontier Communications Stock Quote
Frontier Communications
FTR
Johnson Controls International Stock Quote
Johnson Controls International
JCI
$65.12 (-0.43%) $0.28

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

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