September traditionally is one of the weakest months for the Dow Jones Industrial Average, which was honoring the past with a 2.5% loss of about 280 points to fall under 10,958 in the Tuesday morning session. Dow stocks with exposure to overseas markets such as 3M (NYSE:MMM), Caterpillar (NYSE:CAT) and IBM (NYSE:IBM) have provided the bulk of recent losses for the index. In the U.S., recent releases of poor jobs, economic growth and consumer confidence reports have shaken investors. For the month, the Dow is off by about 4%. This is the worst September start for the Dow Jones since 1974. Every stock on the Dow Jones Industrial Average was down at least 1% in early buying and selling.
The Warren Buffett premium is gone for Bank of America (NYSE:BAC), which lost 35 cents per share, or 5%, to under $6.90. A negative story published Tuesday in The Wall Street Journal detailed how gains from Buffett’s $5 billion investment have vanished. Buffett has warrants to buy BAC at $7.14, and there is no support at that price level. Bank of America has been selling assets but still has the tremendous mortgage liabilities from its Countrywide Credit acquisition. Bank of America is down almost 50% for the past six months. There have been 20 analyst recommendations for Bank of America in the past two years, and not a single one was a “sell.”
JPMorgan (NYSE:JPM) was down more than 4% to below $33.20, shedding over $1.40. As a percentage, JPMorgan has more problem mortgages than Bank of America or Wells Fargo. These could spark more lawsuits from the U.S. and state governments, as well as private parties. With the economy poised to fall back into recession, JPMorgan’s credit card portfolio also could become a drag on the stock. JPM has fallen more than 20% in the past six months without a single “sell” recommendation. JPMorgan is less than 3% above its year low.
Boeing (NYSE:BA) also crash landed from the opening bell, falling almost 4%, around a drop of $2.50 per share, to under $61.70. Concerns about economic growth were pounding away at all major exporters such as Boeing. Reports of rival Airbus heading for a record year again raised investor doubts about Boeing’s ability to maintain its market share. Boeing is down almost 14% for the quarter.
Not even talk of a dividend hike and share buyback program could keep Microsoft (NASDAQ:MSFT) from falling more than 2% to under $25.30. A Forbes article this morning reported that a Goldman Sachs analyst note was projecting a dividend increase for Microsoft, in addition to a massive share buyback program. With more than $25 billion in cash, Microsoft has the capital to finance these moves. At present, the dividend yield for Microsoft is about 2.5%.
3M, which derives about two-thirds of its earnings from Europe, is down about 2.5%, or $2 per share, to around $77.40. 3M is off more than 11% for the quarter and more than 13% for the half-year. It is trading double digits beneath its 50- and 200-day moving averages, and it has a relative strength index rating of 37.33. An RSI rating of 30 is when a stock is considered to be oversold.
Safe-haven stock McDonald’s (NYSE:MCD) fell more than 1% in early action to under $87.10, dropping more than $1 a share. Microeconomic news for McDonald’s has been nothing but positive: It has received seven strong analyst reports this quarter, had robust earnings and is up more than 20% for the year. But weak macroeconomic news from around the globe has even the Gold Arches sagging in the morning session.
Jonathan Yates does not own any of the stocks mentioned in this article.
