The Dow Jones Industrial Average (^DJI) started 2022 flying high. The blue chip index hit its all-time closing high at 36,799.65 points on Jan. 4, 2022. But from there, the rest of the year was rough.
Volatility has rattled stock values throughout the year as investors have been spooked by the aftermath of Russia’s invasion of Ukraine, rising inflation and interest rate hikes.
These five companies, all listed on the Dow, took the brunt of the fallout, finishing among the top 30 blue chip performers for the year. We explain more about what they are and how they came together in this list.
A huge drop for 3M Company (Mmm) – Get a free report the January 3 stock saw its price fall from $177.74 on January 3 to just over $120 on the last trading day before Christmas. So what did the industry, worker safety, health care and consumer goods company of the multinational conglomerate represent? The stock, after rising in July on announced plans to spin off its healthcare businesses into a separate entity, ran into litigation risks. These have been attributed to lawsuits over faulty earplugs causing hearing problems. A move to file for bankruptcy for Aearo Technologies, an acquisition the company made in 2008, managed to anger veterans. The stock continues to be popular due to its dividend history and will be one to watch in 2023.
Nike (NKE) – Get a free report back down to earth in 2022.
Though the company’s stock was one of the pandemic’s favorite assets, the stock is down nearly 35% (as of Dec. 15).
The culprit: a retail environment that has seen demand slow amid inflationary pressure and the looming threat of a recession.
One of the sharpest declines came in late September after the company issued a profit warning, warning that “larger markdowns” will be needed to reduce its global inventory.
“There are record levels of inventory across the industry with slowing demand. Nike is 150 [basis points] one-quarter increase in downward pressure in the company’s calendar [fiscal year] it’s indicative of a fragile environment,” Cowen’s John Kernan said, Retail Dive reported.
Barclays also reduced the company’s stock by weight, lowering its price target to $110 from $125.
“We are more interested in current, forward-looking demand trends and future margin risk,” than first-quarter earnings, said Barclays analyst Adrienne Yih.
Salesforce (CRM) – Get a free reportSan Francisco-based cloud-based software company focusing on customer relationship management, was founded by former Oracle (ORCL) – Get a free report executive Marc Benioff.
Its stock price is down about 50% from its Jan. 3 value of $255.46. The company, after announcing the acquisition of instant messaging program Slack in July 2021, suffered a slump in 2022.
The stock’s poor performance was attributed to broad macroeconomic pressures and cyclical forces, including rising interest rates and recession fears.
A recent management reorganization has caused concern. On December 1, Bret Taylor announced that he will depart on January 31, leaving Benioff as the sole CEO.
However, many analysts think the stock is a buying opportunity.
intel (INTC) – Get a free report, the world’s largest semiconductor chipmaker by revenue, started the year with a share price of $53.41. By the end of December, it had lost about half of its value.
Market headwinds are largely responsible for its decline. A disappointing second-quarter earnings report hastened investor concerns throughout the year. The company has also fallen behind in the innovation race with competitors such as AMD and Nvidia.
The stock, while never reaching its tech bubble in 2000, has been the subject of much discussion in 2022.
The company’s foray into graphics processing units (GPUs) is generally thought to have been mediocre.
Walt Disney Company
Walt Disney (DIS) – Get a free report faced a perfect storm of bad feelings in 2022 even if it produced quite stellar results. The Mouse House has grown streaming service Disney+ faster than expected, but Wall Street has chastised the company’s actions for the cost of doing so. Although former Disney CEO Bob Chapek had outlined the roadmap for increasing the service, which showed that expenses were starting to decline.
Add in that Disney has to navigate an uncertain market for theatrical films and concerns about how a potential recession will impact discretionary spending, and the company’s stock trailed lower even though its actual results were strong.
Former Disney CEO Bob Iger returned later this year after Chapek, Iger’s anointed successor, was abruptly forced off the board.
In reality. Disney has proven to be resilient to the recession and it could be argued that the wealthy will continue to visit Disney World and Disneyland, while people with financial difficulties may be drawn to Disney+ given the value it offers for the price you pay.
Disney has weathered the pandemic and come out stronger, but its stock price doesn’t reflect that reality.
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