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King Digital Suffers Setback; 1 Stock Keeps Dragging on the Dow

By John Divine - Jul 23, 2014 at 6:00PM

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Staffing agency Robert Half International blows out expectations; McDonald's is living in a McNightmare.

For a third day in a row, McDonald's (MCD 1.12%) was a drag on the Dow Jones Industrial Average (^DJI 1.27%), as it deals with a meat scandal in China and disappointing second-quarter results. Boeing, while able to beat Wall Street expectations, also pulled the Dow lower, as analysts raised questions about the aerospace company's cash flow. By Wednesdays' end, the Dow had erased 26 points, or 0.2%, to end at 17,086.

Several questions loom large for McDonald's shareholders today, not least of which is how the company will reignite its same-store sales growth, which literally did not budge last quarter. McDonald's itself was looking for 0.8% same-store sales growth in the quarter, and was unable to live up to even those pitifully low standards. But arguably the biggest issue facing Mickey D's right now is how to recover from the PR nightmare that began earlier this week with reports that a meat supplier in China was selling expired meat to the restaurant. Since then McDonald's has halted orders from the supplier as it investigates, but shares lost another 1% today in the wake of the fallout.

Many wonder if the mood will be so jolly for the creatures of Candy Crush when the changes go into effect. Image source: Candy Crush

Shares of King Digital Entertainment (KING.DL), the newly public app-maker behind the popular puzzle game Candy Crush Saga, took a big hit today as a result of recent regulations that will likely make revenue harder to come by. Companies like Apple and Google are removing so-called "freemium" games -- which are free to download but offer tons of in-app purchases -- from the "free apps" section of their respective app stores in Europe, due to regulatory pressure. King Digital Entertainment stock lost 5.6% today, which also saw Bank of America downgrade the shares from buy to neutral.

On a lighter note, shares of job placement service Robert Half International (RHI 1.43%) surged 7.3% Wednesday. Citing an improving labor market, the company's revenue rose nearly 10% last quarter, while net income soared 19%. Both figures topped expectations. The labor market is improving steadily, which should be great business for Robert Half if the trend continues. The economy added 288,000 jobs last month, as the unemployment rate fell to 6.1% in June, its lowest reading since September 2008.

John Divine owns shares of Apple and Google (C shares). You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Apple, Bank of America, Google (A and C shares), McDonald's, and Robert Half International and owns shares of Apple, Bank of America, and Google (A and C shares). 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,761.05 (1.27%) $424.38
McDonald's Corporation Stock Quote
McDonald's Corporation
$262.18 (1.12%) $2.90
Robert Half International Inc. Stock Quote
Robert Half International Inc.
$82.32 (1.43%) $1.16
King Digital Entertainment plc Stock Quote
King Digital Entertainment plc

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