The Dow Jones Industrial Average is up 1.32% through the first week of March despite being buffeted by waves of fear and optimism regarding the strength and direction of the economy.
IN PICTURES: Digging Out Of Debt In 8 Steps

Despite this decent monthly return, not everyone enjoyed the fruits of success, as 11 of the 30 Dow stocks are down for the year. These losers are in a variety of industries from technology to telecom to basic materials.

Coming In Last
Alcoa (NYSE:AA) is the worst performer in the Dow Jones Industrial Average, down 14.3% since the start of 2010. Investors have sold off many basic materials stocks due to skepticism over world economic growth rates being strong enough to support current valuations. This skepticism was stoked further by news of China tightening interest rates to cool off its own growth. Investors are assuming that any major slowdown in Chinese economic growth would torpedo the commodity bull market.

Slowing Down
Both AT&T (NYSE:T) and Verizon (NYSE:VZ) saw drops of approximately 9% year to date. There's been so much news lately regarding these two stocks that it's hard to discern which might have caused the underperformance.

On the earnings front, Verizon Communications reported earnings of $0.54 per share for the fourth quarter of 2009, right in line with analyst estimates. Despite the increasing sales of mobile subscribers, the company is under continuous pressure from industry competition.

AT & T also hit its earnings number head on when it reported fourth quarter of 2009 earnings of $0.51 which are expected to increase by 6% this quarter. The big news for the company was the addition of 2.7 million subscribers to its service, due mainly to its deal with Apple (Nasdaq:AAPL) on the iPhone.

One macro reason for the underperformance of these two stocks might be that telecom services is typically seen as a safe haven during a recession, and since the economy seems to be emerging from that recession, investors are seeking alternative investments.

Heavy Hitter Takes A Hit
Microsoft (Nasdaq:MSFT) also had a solid earnings report, and yet is still down 5.64% year to date. The company earned net income of $6.66 billion, or $0.74 per diluted share in its second fiscal quarter, double-digit year over year percentage gains in both categories.

Windows 7, the company's latest version of its operating system, led the charge during the quarter. The company reported sales of 60 million licenses for the product since its release, making it the fastest selling operating system it has ever sold.

The Bottom Line
The market has been fickle so far in 2010, rewarding some Dow stocks with major gains and other with significant under performance. Investors that were either lucky or skilled enough to avoid these four names are no doubt celebrating. (Just because a stock is in a slump doesn't mean it's time to sell. Some value managers make a living by investing in "dogs." For more information, refer to Don't Dump On The Dogs.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  2. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  3. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  4. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares US Regional Banks

    Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks.
  6. Technical Indicators

    Using Moving Averages To Trade The Volatility Index (VIX)

    VIX moving averages smooth out the natural choppiness of the indicator, letting traders and market timers access reliable sentiment and volatility data.
  7. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  8. Investing News

    The Brief: Where Is the Bottom?

    Where is the market going today after yesterday's bumpy ride?
  9. Technical Indicators

    Key Financial Ratios to Analyze the Mining Industry

    Discover some the most important financial ratios used by investors and analysts to evaluate companies in the metals and mining industry.
  10. Technical Indicators

    Key Financial Ratios to Analyze Retail Banks

    Learn about key financial metrics that investors use to evaluate retail banks, and how the industry is fundamentally different from most other industries.
RELATED TERMS
  1. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  3. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  4. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  5. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  6. Long-Term Debt

    Long-term debt consists of loans and financial obligations lasting ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!