Alcoa Inc (AA), The Boeing Company (BA), Hewlett-Packard Company (HPQ): Dow Jones Industrial Average (.DJI)’s Year-to-Date Winners and Losers

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With two-thirds of the year over, it’s a good time to look at the performance of the Dow Jones Industrial Average (INDEXDJX:.DJI) and a few of its big winners and losers for the year. As for the Dow Jones Industrial Average (INDEXDJX:.DJI) itself, the index is up 13.02%, even after a terrible August, in which the average lost 4.45% in that month alone. But despite August, the Dow Jones Industrial Average (INDEXDJX:.DJI) has had a great run at it this year, with only two down months while moving higher during the other six. January was the best month of the year, as the index rose 5.77% and, other than August, June was the only down month as the average lost 1.36%.

A number of factors have played a role in why the markets have gone up and down this year, but so far the Federal Reserve has the hands down most powerful effect. For months now, market participants have waited for the Fed to start tapering its bond-buying program and every time it appears it will begin, stocks fall. And when it would seem the tapering will be pushed back, stocks rally as investors gain more confidence in the economy’s ability to grow and strengthen with the government’s support.

Now that you know how the Dow Jones Industrial Average (INDEXDJX:.DJI) has done and why, let’s take a look at a few of the big individual winners and losers of the year.

Alcoa Inc (NYSE:AA)

Losers first
Alcoa Inc (NYSE:AA) is the Dow Jones Industrial Average (INDEXDJX:.DJI)’s worst-performing stock year to date, as shares are down 11.29% since the start of 2013. Caterpillar Inc. (NYSE:CAT) is next, with the stock having fallen 7.89%. And the only other Dow component that is down since the start of 2013 is IBM, which has lost 4.84%. As for Alcoa Inc (NYSE:AA) and Caterpillar Inc. (NYSE:CAT), these two companies have been affected by not only the slower-than-expected recovery here in the U.S. but also slowing economies all around the world. Europe is still struggling, China is slowing, Brazil and other parts of South America aren’t wonderful. These slowing economies play on the revenues and profits of Alcoa Inc (NYSE:AA) and Caterpillar, which are both heavily reliant on strong construction and large infrastructure projects to help boost sales.

Additionally, they have been hurt by lower commodity prices. While Alcoa Inc (NYSE:AA) obviously needs aluminum to sell at a high price to help it out, Caterpillar Inc. (NYSE:CAT) typically sees higher sales in its mining equipment unit when precious metals or mined raw materials are selling at a premium — again, another area that would normally help the two but hasn’t this year.

When it comes to buying shares of either company, I personally would stay away from Alcoa Inc (NYSE:AA) while being patient with Caterpillar. Alcoa is in a commodity-driven industry and truly has no way of setting itself apart from the competition. Every other aluminum producer is selling the same thing and some of those producers are OK with losing money because their governments help support the business. That puts Alcoa Inc (NYSE:AA) in a position where the competition is selling the same thing for less than it can and it’s still not going to go out of business, whereas you are.

But with Caterpillar, someone investing now needs to understand it may be a while before the company gets back on its feet when it comes to sales and growing those numbers. Today’s share price also may look attractive on a price-to-earnings basis, but it may become more attractive in the future, so buying in thirds would be the best approach if you’re convinced the Cat is a buy at this price.

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