The Dow Jones Industrial had been rolling right along this summer.
From its lows on June 17 (first day of summer: June 21) at 29,888 to a short-term peak of 34,152 on Aug. 16, the Dow had rallied about 14% as traders dialed back expectations on a faster pace of rate hikes from the Federal Reserve. Economic data from jobs to retail sales, meanwhile, didn't paint a picture of an economy tipping into a recession.
Sprinkle on signs of peak inflation, and the Dow was on a hot streak.
And then Fed chief Jerome Powell recommitted to stomping out inflation on Aug. 26, promising to do whatever it takes to bring price levels throughout the economy down. Investors took Powell's tough talk as interest rates are headed higher well into 2023.
The Dow cratered more than 1,000 points on Friday, slashing its gains this summer to 5.7%.
"The equity markets should prepare to be disappointed by Jerome Powell’s speech," Comerica Wealth Management chief investment officer John Lynch wrote in a note to clients. "Stock investors have embraced a strategy based on hope that the Fed and inflation have peaked these past several weeks."
But even before Powell's hawkish speech, several Dow components were having a rough go of it amid a combination of lackluster earnings days and economic uncertainty.
Here are six Dow components that are probably wishing summer was over.
Summer Performance: -15%
Quick Take: There wasn't much to like in Verizon's earnings release in late July as the Street came away with the view the telecom is losing market share to rival T-Mobile. Verizon had a trifecta of letdowns on earnings day: (1) Full year wireless service sales guidance was cut to 8.5% to 9.5% from 9% to 10%; (2) Full year earnings are seen in the range of $5.10 to $5.25 compared to $5.40 to $5.55 previously; and (3) The company added only 12,000 net retail phone subscribers in the second quarter, below estimates for around 144,000.
Summer Performance: -11.6%
Quick Take: The company had a shocking second quarter earnings miss and profit warning earlier this month amid a broader slowdown in the consumer PC market. "This is a time for a bit of austerity," Intel CEO Pat Gelsinger told Yahoo Finance Live. "We had stuff we created over the last decade that needed to be cleaned up. It helps drive a more accelerated pace to the transformation we have under way."
Walgreen's Boots Alliance
Summer Performance: -10.2%
Quick Take: Walgreen's had a solid earnings report in late June. But tepid second quarter earnings reports from competing retailers Walmart and Target in August have weighed on the pharmacy chain's stock.
Summer Performance: -5.5%
Quick Take: IBM has gotten little love from the Street after it trimmed its full year free cash flow guidance in late July to $10 billion compared to $10 billion to $10.5 billion previously. Commentary from companies in IBM's tech sphere on slowing enterprise demand (see fellow Dow component Salesforce's warning last week) has weighed on the stock more recently.
Johnson & Johnson
Summer Performance: -5.1%
Quick Take: J&J also issued a profit warning in late July, putting its stock in the doghouse despite an almost 3% dividend yield. The company slashed its full year earnings estimate to $10 to $10.10 a share from $10.15 to $10.35 previously.
Summer Performance: -2.3%
Quick Take: Similar to Verizon, Caterpillar had a dud of an earnings day. The company continued to withhold from providing full year guidance, sales were weak in Europe and under pressure in China. Lackluster economic reads on China (a key market for Caterpillar) since late July have further weighed on Caterpillar's stock.