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

By John Divine – Feb 10, 2014 at 7:14PM

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The oil and gas sector ends as the worst in the stock market today; refiners in particular are Monday's biggest losers.

The era of Ben Bernanke is now over, and tomorrow morning the first female head of the Federal Reserve, Janet Yellen, will ring in a new era as she addresses Congress and outlines her economic mind-set. "Big Ben" stepped down as Fed chairman at the end of January, and investors around the globe are hoping that Yellen's tenure isn't fraught with the sorts of severe economic calamities that plagued Bernanke's reign. With little new data to go on and only Yellen's appearance to look forward to, the S&P 500 Index (^GSPC -0.03%) teetered through the day, ending up 2 points, or 0.2%, to end at 1,799.

Although most stocks edged higher on Monday, the oil and gas sector was the single worst-performing area of the markets, losing 0.6% as a whole. Shares of Texas-based refiner Phillips 66 (PSX 0.06%) shed 2.7% on Monday, as oil prices broke $100 a barrel. Refiners face tougher margins as the price of oil goes up, since they have to purchase oil at the higher price before refining and selling it. Phillips 66, a $42 billion company, is the largest independent oil refiner in the U.S. 

Valero Energy (VLO -0.58%) is no mom-and-pop business, either, with a market cap around $25 billion. Shares lost 2.5% today, ending with Phillips 66 toward the bottom of the S&P 500. Valero Energy is also an oil refiner, so it was already facing headwinds in today's market, but the company's quarterly dividend is what really sent it southward. Valero rewards investors with a $1.00 (or 2%) dividend per share per year, which amounts to $0.25 (or 0.5%) per share per quarter. On "ex-dividend" days, like today, shares are expected to have a 0.5% downwards bias, since anyone who owned shares yesterday could've sold them today and still locked in that $0.25 quarterly dividend when it's paid out.

Lastly, shares of Marathon Petroleum (MPC -0.32%) fell 2.3% Monday, rounding out today's list of laggards. I'll give you three guesses what sector Marathon Petroleum falls under. If you guessed technology, you're out of luck, and probably a bit confused as well. Marathon Petroleum is in the oil and gas sector; specifically, it's a refiner. Like Phillips 66 and Valero Energy, higher domestic oil prices mean lower margins for Marathon, whose financial success is based, broadly speaking, on the difference between domestic and international oil prices. Marathon goes "ex-dividend" on Friday.

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
$4,026.12 (-0.03%) $-1.14
Valero Energy Stock Quote
Valero Energy
VLO
$138.40 (-0.58%) $0.81
Phillips 66 Stock Quote
Phillips 66
PSX
$110.78 (0.06%) $0.07
Marathon Petroleum Stock Quote
Marathon Petroleum
MPC
$125.20 (-0.32%) $0.40

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

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