Dow Jones Industrial he had it was just rolling this summer.
From its June 17 (first day of summer: June 21) low of 29,888 to a short-term high of 34,152 on August 16, the Dow had risen about 14% as investors dismissed expectations of a faster pace of rate hikes than Federal Reserve Bank of the United States. Economic data from jobs to retail sales, meanwhile, did not paint a picture of an economy headed for recession.
Sprinkle in signs of peak inflation and the Dow was on a hot streak.
And then Fed chief Jerome Powell recommitted to eliminating inflation on August 26, pledging to do whatever it takes to lower price levels across the economy. Investors took Powell’s tough talk as rates move higher into 2023.
The Dow cratered more than 1,000 points on Friday, paring its gains this summer to 5.7 percent.
“Equity markets should prepare to be disappointed by Jerome Powell’s speech,” Comerica Wealth Management chief investment officer John Lynch wrote in a note to clients. “Equity investors have adopted a strategy based on the hope that the Fed and inflation have peaked in recent weeks.”
But even before Powell’s hawkish speech, many Dow components had a rough run amid a combination of low earnings days and economic uncertainty.
Here are six Dow factors that are probably wishing the summer was over.
Summer show: -15%
Quick download: There wasn’t much to like in Verizon’s late July earnings release, as the Street came away with the view that the telco is losing market share to rival T-Mobile. Verizon had a triple whammy on earnings day: (1) Full-year wireless sales guidance was cut to 8.5% to 9.5% from 9% to 10%; (2) Full year earnings ranged from $5.10 to $5.25 compared to $5.40 to $5.55 previously. and (3) The company added only 12,000 net retail phone subscribers in the second quarter, below estimates of about 144,000.
Summer show: -11.6%
Quick download: The company had a shocking second-quarter profit and loss warning earlier this month amid a broader slowdown in the consumer PC market. “It’s time for some austerity,” Intel CEO Pat Gelsinger told Yahoo Finance Live. “We had things that we built over the last decade that needed to be cleaned up. It helps accelerate the pace of the transformation that we have going on.”
Walgreen’s Boots Alliance
Summer show: -10.2%
Quick download: Walgreen’s had a solid earnings report at the end of June. However, tepid second-quarter earnings reports from rival retailers Walmart and Target in August have weighed on the drugstore chain’s stock.
Summer show: -5.5%
Quick download: IBM was not much loved by the Street after it cut its guidance for full-year free cash flow at the end of July to $10 billion compared with $10 billion to $10.5 billion previously. Commentary from companies in the IBM technology sector about slowing business demand (see fellow Dow Salesforce’s warning last week) weighed on the stock more recently.
Johnson & Johnson
Summer show: -5.1%
Quick download: J&J also issued an earnings warning in late July, putting its stock in the dog house despite a dividend yield of nearly 3%. The company cut its full-year earnings estimate to $10 to $10.10 per share from $10.15 to $10.35 previously.
Summer show: -2.3%
Quick download: Similar to Verizon, Caterpillar had an earnings day. The company continued to miss guidance for the full year, with sales weak in Europe and under pressure in China. Weak economic readings for China (a key market for Caterpillar) since late July have further weighed on Caterpillar stock.
Brian Sozzi is editor-in-chief and Anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and up LinkedIn.
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