Bad News Hammered Several Key Stocks Last Week


No, it wasn’t a nightmare. There was a lot of bad news on a lot of companies last week.

At least five of the 30 members of the Dow Jones Industrial Average dropped amid some kind of bearish headline:

  1. Apple (AAPL): Wall Street analysts continued to hammer the once-impregnable champion of the technology space. This time, TF International, Piper Jaffray and Citi cautioned of weaker iPhone shipments.
  2. Johnson & Johnson (JNJ): Reuters reported that the health-care giant concealed a history of asbestos contamination in its baby powder. (Management disputed the story.) The stock went from a record closing high to its worst level since August in the blink of an eye.
  3. Pfizer (PFE): Another health-care biggie stumbled, this time because of a downgrade by J.P. Morgan. The analyst said it’s no longer a value play.
  4. Verizon Communications (VZ): Similar to PFE, only the telecom was downgraded by Morgan Stanley following a nice run.
  5. Walgreen Boots Alliance (WBA): Goldman Sachs cut the pharmacy to “sell.” The note expressed doubts about its ability to leverage a series of partnerships.
Apple (AAPL) chart with 50- and 200-day moving averages.

Aside from those members of the Dow, several other prominent names outside the index took a beating.

Discount retailer Costco (COST), for instance, dropped 8 percent after higher wages and investments squeezed earnings. That was eerily similar to Target’s (TGT) margin troubles. Is this industry’s profitability now in question, regardless of sales growth?

Adobe Systems (ADBE), once steady as clockwork, also missed on the bottom line. Revenue came in above estimates, so once again we’re looking at margin troubles. ADBE slid about 3 percent on the week.

Starbucks (SBUX) cut its long-term growth projections. It didn’t drop much on that announcement, but it fits the trend of news getting worse and not better.

Under Armour (UAA), however, fell plenty on its guidance cut. Once the athletic-clothing maker tried to take market share from Nike (NKE), but now the hunter has become the hunted. So much for growing in North America…

In conclusion, macro-level concerns about the economy and trade remained in effect last week. But there were also an unusual number of company-specific headlines impacting several important names.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.