Apple Inc. is among those 12 stocks in the Dow Jones industrial average that dragged down the widely watched market measure since it last hit its peak previous year, as per USA TODAY analysis of data from S&P Global Market Intelligence. On Wednesday, the bulls celebrated the Dow’s push to another new high, but the investors taking a closer look can see the index is still full of sour apples – Apple, Goldman Sachs, American Express, etc. With a little help from this group, the DOW might look even rosier than it does today.
Lagging stocks – a drag for the winners
This year, the winning Dow stocks have been strong enough to push the Dow up 50 points from its former high. On Wednesday, the Dow hiked nearly 24 points to 18,372 to a new all-time high for the second day in a row. This year, these stocks, which have collectively erased more than 1,200 Dow points from Dow’s former peak set on May 19, 2015, are being left out of the Dow’s run. For the rest of the Dow members, the drag from these lagging stocks is a big hurdle to overcome, says a report from USA Today.
David Sowerby, strategist at Loomis, Sayles, says even as the Dow retakes high ground, the fact there are so many big losers in the Dow, should ring warning bells for investors. “Skepticism, while challenging, is a good thing for stock prices to find higher levels,” he says. “It’s better than the bliss at a market top.”
Stocks that pulled the Dow down
Goldman Sachs is continuing to plague the Dow. The shares of the bank are off 23% from the Dow’s 2015 high to $157.92. The decline of Goldman has wiped 327 points from the index as the Dow gives a greater weight to stocks with the highest per-share prices.
Devin Ryan – analyst at JMP Securities – says the problems of Goldman Sachs are symbolic of the challenges other highly sensitive financial stocks are facing. Tepid global growth and low interest rates around the world are hurting the shares of the bank. Ryan says “Economically sensitive financials are trading at historical market lows, while the broader market is trading at high.”
Another big example of a struggling Dow stock is American Express. The stock dropped 22% from the time of the Dow’s high last year. Another big Dow stock that dropped is International Business Machines (IBM) – down 8.9% from the 2015 Dow high.
Apple – a high-profile example of tech’s struggles
Apple Inc. shares are down by nearly 26% to $96.87 from the 2015 high. This is a larger percentage drop than any other Dow component. Apple investors are losing their confidence as earnings shrink, and tablet and smartphone markets get less popular. The adjusted earnings of the tech giant is expected to drop 25% to $1.39 a share in the June quarter, making it the second-straight quarter of adjusted quarterly profit declines.
This year, Apple Inc. is the most high-profile example of tech’s struggles. Sowerby believes a strong U.S. dollar and weak global growth have been “headwinds” for tech stocks.