October's Worst Stock Performers

October was one of the worst months the stock market has ever been forced to experience. The Dow Jones index fell 1,526 points or 14.1%. The Nasdaq dropped 361 points or 17.4%. And the S&P 500 index fell 196 points or 16.8%.

The extreme volatility in the markets led to 20 out of the 23 trading days producing triple-digit moves in the Dow index. The Dow fell over 300 points on seven different days, including a whopping 733 point loss on October 15. The intraday volatility was even greater with 19 days producing swings of over 500 points, including the extraordinary 1,215 swing on October 10.

As the smoke cleared on Wall Street, the carnage from the crash of October 2008 was almost beyond belief. Solid blue-chip companies saw their market capitalizations fall 20, 30, 40 and even 50%.

Dow Components

The decline in ad spending certainly hit the internet sector in October. The consistent theme on quarterly earnings calls was the significant economic challenges that hit in September-October and bleak outlooks for the future.

• Alcoa (AA) saw their shares lose almost half their value (49%) as falling commodity prices, analyst downgrades and disappointing third quarter results had investors running for the exits.
• General Motors (GM) fell 39% on a 16% drop in September auto sales and concerns about the company’s ability to remain in business beyond 2009.
• Weakening demand and the company’s delaying giving 2009 guidance until next quarter sunk Catepillar’s (CAT) shares nearly 26% for the month.
• Other notables included Bank of America (BAC) and Citigroup (C) both falling over 30%.

Internet

The decline in ad spending certainly hit the internet sector in October. The consistent theme on quarterly earnings calls was the significant economic challenges that hit in September-October and bleak outlooks for the future.

• VistaPrint (VPRT) led the decline with a 48% drop after the company reduced their 2009 forecast.
• Travel Zoo (TZOO) fell 44% after reporting disappointing third quarter results that failed to meet Wall Street’s expectations.
• Orbitz (OWW) dropped 43% on analyst downgrades and anticipation of weak third quarter numbers.
• Dice.com (DHX) fell 42% after reducing 4^th quarter guidance and commenting that the challenging economic environment makes it unlikely to see growth in 2009.

Restaurants

A bleak economic outlook sunk restaurant stock prices as the market anticipates a significant reduction in discretionary consumer spending. In tough economic times, one of the first items to be cut from household budgets is eating out. The entire airline sector benefited from falling oil prices in October. Crude oil prices fell from almost $100 per barrel at the beginning of the month to less than $70 by the end of the month.

• Ruby Tuesday (RT) shares dropped 58% on poor quarterly results and speculation that the company may be forced to file for bankruptcy.
• Brinker International (EAT), the parent company of Chili’s, Maggiano’s Little Italy and On The Border Mexican restaurants, was down 48% after reducing their 2009 outlook to earnings growth of only 8 – 10%.
• Domino Pizza (DPZ) dove 51% after posting weaker than expected quarterly results and announcing that it was now looking for funding after their primary lender (Lehman Brothers) filed for bankruptcy.
• In addition, Red Robin (RRGB), Cheesecake Factory (CAKE), and Steak ’n Shake (SNS) were all down 40% or more for the month.

Technology

Technology stocks have certainly fared better this year than they did during the last (tech-led) recession. However, the last two months they have felt the impact of consumers reducing their spending and businesses cancelling contracts and cutting their cap ex budgets.

• Salesforce.com (CRM) shares dropped 39% as UBS downgraded the stock to a sell rating and management comments that pricing pressures will likely force it to cut prices.
• Sun Microsystems (JAVA) was down 39% after pre-announcing disappointing quarterly results.
• Symantec’s (SYMC) stock price fell 36% after providing disappointing third quarter guidance that was well below Wall Street’s expectations.
• In addition, Best Buy (BBY), Garmin (GRMN), Adobe Systems (ADBE), SAP  (SAP) and Corning (GLW) were all down over 30% for the month.

Department Stores

Reduced consumer spending led to declining same-store sales and to falling stock prices within the Department store sector. · A 12% drop in same-store sales, compounded with being removed from the S&P 500 index sunk Dillard’s (DDS) shares 55%. · Declining sales prospects also led to Macy’s (M), Nordstrom’s (JWN), and Sears Holdings (SHLD) all dropping over 30% for the month.

Disclosure: none

Comments

[Pipo:]

Oil Stocks also had a disaster last few weeks.

But Boone Pickens is expecting consolidation in the industry.

Read it on: oiltradersblog.blogspo.../

2008 Nov 09 12:09 PM