McDonald’s, BAC a Drag on Dow Jones

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The Dow opened sharply lower Friday morning, dropping about 170 points to fall under 11,128, a loss of about 1.5%. Investors had plenty to be worried about. President Barack Obama’s $447 billion plan to create jobs was poorly received and has no support from the Republican-controlled House of Representatives. A key U.S. Senator, John Kyl, R-Arizona, threatened to leave the debt commission panel if military spending was reduced. A top official’s departure from the European Central Bank threatened any resolution of the continent’s debt crisis. Also, Federal Reserve Chairman Ben Bernanke’s speech Thursday afternoon did not offer the help Wall Street was hoping for the U.S. economy.

For the past five days of trading, the Dow Jones Industrial Average is down more than 3.1%. Not a single stock on the Dow Jones Industrial Average was up in early-morning action.

McDonald’s (NYSE:MCD) was down more than 4%, or around $4, to under $85. The Golden Arches were drooping over Wall Street as August sales did not increase as much as anticipated, particularly in Asia. Still, McDonald’s is up about 10% for the quarter and more than 22% for the year. With its strong dividend and solid franchise, McDonald’s increasingly is being considered a safe-haven stock for investors seeking stability.

Bank of America (NYSE:BAC) was down along with the rest of the financial sector, dropping about a dime per share, or about 1.5%, to around $7.10. Massive layoffs of about 40,000 are being considered. Yesterday, Bank of America announced it would close about 600 branches. Bank of America is down almost 50% year to date. JMP Securities and Guggenheim Partners both cut earnings estimates for Bank of America this morning.

Another highly regarded stock, JPMorgan (NYSE:JPM), was off more than 2% early, losing almost $1 per share to trade around $32.70. JPMorgan has a high percentage of problem mortgages. With the economy slipping, its credit card portfolio also could become a drag on earnings. JPM is down about 10% for the week and 20% for the year.

Pfizer (NYSE:PFE) was down almost 3%, losing more than 50 cents to fall under $18.30 per share. Johnson & Johnson and Bayer just won an FDA panel’s approval for a stroke-preventing drug to compete with Pfizer’s. For the year, Pfizer is up almost 17%. It was upgraded to a “buy” by Argus on Aug. 10 and Standpoint Research on Aug. 5.

General Electric (NYSE:GE) was off another 2%, about 30 cents, to trade for less than $15.30 per share. Concerns about growth in Europe were bringing GE’s shares down. General Electric has lost more than 4% per share for the week and more than 21% for the past six months.

Down about 3%, or 70 cents, to under $23.20 was Hewlett-Packard (NYSE:HPQ). The announced restructuring of the company continues to plague Hewlett-Packard. Since the company announced in mid-August that it would spin off or sell its personal computer division, the stock has lost almost 25%. RBC Capital Markets downgraded HPQ on Aug. 25.

Jonathan Yates does not own any of the stocks mentioned in this article.


Article printed from InvestorPlace Media, https://investorplace.com/2011/09/mcdonalds-bank-of-america-bac-dow-jones/.

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