With the United States still attempting to raise the debt ceiling and facing a default next week, and with the debt crisis in Greece also unresolved, the Dow Jones Industrial Average opened down about 0.5%, dropping to around 12,600, with financials among the hardest hit. Investors were concerned the U.S.’ credit rating will be downgraded even if the debt ceiling is raised in time to avert a default.
Boeing (NYSE:BA) was descending in price by more than a dollar to $71.60, about a 1.5% loss, because of concerns about its earnings and corporate direction. On Wednesday, Boeing reports its earnings for the second quarter of 2011. A huge order from American Airlines, the largest in history, is split between Boeing and Airbus, raising investor doubts about the future of Boeing’s U.S. market share. On July 20, BB&T Capital Markets issued a “buy” recommendation for Boeing.
After rebounding last week from losses following its earnings report, Bank of America (NYSE:BAC) was down about 1.8%, dropping about 20 cents per share to around $9.95. Fears of a downgrade of U.S. debt is hitting the financial sector hard. The sector is the worst-performing group on the Dow Jones Industrial Average for 2011, and Bank of America is the worst-performing stock, down 26%.
Also suffering from default concerns was JP Morgan (NYSE:JPM), off more than 60 cents to under $41.60, about a 1.45% drop. Last week, JP Morgan reported better numbers than expected. As a result, it was up more than 5.5% for the week.
After being brutalized Friday thanks to disappointing second-quarter numbers, Caterpillar (NYSE:CAT) bounced back at the opening bell, rising more than 50 cents to above $105.75, picking up more than 0.5% in early action. The world’s largest heavy-equipment maker, Caterpillar is up more than 5.4% for the month but down more than 3.3% for the week because of losses Friday. Caterpillar is a volatile stock with a beta of 1.71.
With improved new-home sales expected to be released tomorrow, Home Depot (NYSE:HD) was up about 0.3% in early action, a gain of more than 10 cents to take it over $36.60. Home Depot is now trading above its 20-, 50- and 200-day moving averages. During the past week, Home Depot is up more than 1.7% and also up more than 4.54% during the past month.
McDonald’s (NYSE:MCD) continued to rise after posting robust earnings for the second quarter last week, shooting up more than 0.42% to more than $88.95, a gain of more than 40 cents. Increasing revenue by more than 16% during the same period for last year, McDonald’s stock is up 3.6% for the week. This morning, an “outperform” rating was reiterated for McDonald’s by RBC Capital Markets.
Jonathan Yates does not own any of the stocks mentioned in this article.
