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7 Dow Jones Laggards as We Drop Below 26,000

William Roth

U.S. equities were under massive pressure on Wednesday, with the Dow Jones Industrial Average falling back below the 26,000 threshold for the first time since early September.

Investors are being spooked by the combination of rising long-term interest rates, weakness in emerging-market currencies (especially the Chinese yuan) and evidence that higher interest rates are starting to take a bite out of consumer demand for things like houses and automobiles. Sector rotation is in play, with defensive flows into areas like utilities while technology and semiconductor stocks are slammed.

Here are seven Dow Jones Industrial Average titans that are succumbing to the selling pressure:

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American Express (AXP)

American Express (NYSE:AXP) shares are dropping below their 50-day moving average, down more than 6% from the highs set back in September. Watch for a drop down to the 200-day moving average, which would be worth another 5% decline from here. Investors are fearful that higher interest rates will translate into more credit card defaults and a slowdown in charge spending.

The company will next report results on Oct. 18 after the close. Analysts are looking for earnings of $1.77 per share on revenues of $10 billion. When the company last reported on July 18, earnings of $1.84 beat estimates by two cents on a 9% rise in revenues.


Caterpillar (CAT)

Caterpillar (NYSE:CAT) shares have dropped hard below their 200-day moving average and are threatening to fall below their 50-day moving average as well. This happened after shares hit overhead resistance near the $160-a-share level going back to the spring as the company remains in the crosshairs of ongoing trade tensions between President Donald Trump and China.

The company will next report on Oct. 23 before the bell. Analysts are looking for earnings of $2.82 per share on revenues of $13.2 billion.

When the company last reported on July 30, earnings of $2.97 beat estimates by 23 cents per share on a 23.7% rise in revenues.


Goldman Sachs (GS)

Shares of Goldman Sachs (NYSE:GS) are threatening to fall below their June/July lows and return to levels not seen since early 2017. This caps a loss of more than 20% from the highs hit in March and comes after overhead resistance at the 200-day moving average foiled the bulls. While many financial stocks have been getting a bid on net interest margin hopes from higher rates, GS is getting hit on its larger exposure to bond portfolio losses as yields rise.

The company will next report results on Oct. 16 before the bell. Analysts are looking for earnings of $5.41 per share on revenues of $8.4 billion. When the company last reported on July 17, earnings of $5.98 per share beat estimates by $1.33 on a 19.2% rise in revenues.


IBM (IBM)

IBM (NYSE:IBM) shares are tumbling, slicing below their 50-day and 200-day moving averages to return to levels last seen in the middle of August. Shares were recently initiated with a sell rating by analysts at MoffettNathanson, which has weighed on sentiment and pushed prices back into the midst of a year-long consolidation range.

The company will next report results on Oct. 16 after the close. Analysts are looking for earnings of $3.40 per share on revenues of $19.1 billion.

When the company last reported on July 18, earnings of $3.08 beat estimates by four cents on a 3.7% rise in revenues.


3M Co. (MMM)

3M Co. (NYSE:MMM) shares are dropping below their 50-day moving average after hitting resistance near their 200-day moving average — a level that turned shares lower back in April as well. Watch for a test of the early May lows, which would be worth a loss of more than 7% from current levels. The decline comes despite a price target increase from analysts at Deutsche Bank back on Sept. 28, to $220 from $210 previously.

The company will next report results on Oct. 23 before the bell. Analysts are looking for earnings of $2.72 per share on revenues of $8.4 billion. When the company last reported on July 24, earnings of $2.59 missed estimates by a penny on a 7.4% rise in revenues.


Nike (NKE)

Nike (NYSE:NKE) shares are falling hard out of a seven-month uptrend, careening away from its 50-day moving average for a loss of nearly 12% from the double-top high hit near $86. A drop to the 200-day moving average would be worth a loss of 5% from here. The stock suffered a downgrade form HSBC analysts on Oct. 3.

The company will next report results on Dec. 20 after the close. Analysts are looking for earnings of 45 cents per share on revenues of $9.2 billion.

When the company last reported on Sept. 25, earnings of 67 cents per share beat estimates by four cents on a 9.7% rise in revenues.


United Technologies (UTX)

United Technologies (NYSE:UTX) shares are dropping below their 50-day moving average, returning to their July-September consolidation range for a loss of more than 8% from their recent high. The company is exposed to the ongoing trade tensions with China, as the company’s proposed merger with Rockwell Collins (NYSE:COL) is subject to approval by regulators in Beijing.

The company will next report results on Oct. 23 before the bell. Analysts are looking for earnings of $1.82 per share on revenues of $16.2 billion. When the company last reported on July 24, earnings of $1.97 beat estimates by 11 cents on a 9.3% rise in revenues.

As of this writing, William Roth did not hold a position in any of the aforementioned securities.

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