The Dow Jones Industrial Average experienced a slight decline in October, influenced by underwhelming earnings from Microsoft and Meta Platforms, as well as an accounting scandal involving AI server manufacturer Super Micro Computer, which negatively affected AI stocks. The performance of the indexes dipped into negative territory on the last day of the month.
Market pullbacks sometimes present buying opportunities, prompting an assessment of the three worst-performing stocks in October to determine if any blue-chip stocks are worth considering.
Nike (decreased by 12.8%)
Nike faced challenges as the sportswear company reported another disappointing quarter, losing market share to emerging competitors and dealing with issues from former CEO John Donahoe’s tenure. In September, Nike appointed Elliott Hill, a long-term company veteran, as the new CEO, to address falling revenue and profits and steer the company back to growth. Hill, known for leading Nike’s product and marketplace division, is expected to focus on revitalizing the wholesale business and refreshing product offerings. Although Nike shows potential for a recovery, clear signs of progress are awaited before considering it a buy.Merck (decreased by 9.9%)
Merck, the pharmaceutical company, was another underperformer, with its stock affected by rising interest rates that put pressure on dividend stocks. Despite Merck’s strong earnings report, including a 4% revenue increase to $16.7 billion, the stock declined. Keytruda, the cancer-fighting drug, drove sales, rising 17% to $7.4 billion, contributing significantly to the company’s revenue. However, declining sales in other drug franchises and concentration risk due to Keytruda’s large share of total sales pose challenges. Given its slow revenue growth, Merck does not present a compelling buy case even after the recent decline.- Dow (decreased by 9.6%)
Dow, a chemical manufacturing company and one of the smaller entities on the Dow Jones Industrial Average, saw a steady fall in its stock. Rising interest rates, along with Dow’s sensitivity as a cyclical stock to economic changes, influenced its decline. The company reported a 1% growth in net sales, reaching $10.9 billion, with flat pricing and a slight increase in volume. Adjusted earnings per share dropped marginally from $0.48 to $0.47. Despite underperforming compared to the Dow Jones Industrial Average and S&P 500 in recent years, Dow offers a 5.7% dividend yield, which might appeal to dividend investors. The company did not provide specific guidance but indicated that it expects economic cycle improvement and targets more than $3 billion in earnings by 2030.
