In this article, we discuss the 10 worst performing Dow stocks on a year-to-date basis along with the current market conditions.
After the disastrous performance of 2022, the market has recovered better than expected and is on a growth trajectory. According to BlackRock’s Q4 2024 Equity Market Outlook, despite concerns about the economy, fundamentals have kept stocks resilient. Opportunities are seen in large-cap stocks, which may outperform both mega and small caps.
Volatility is viewed as normal and can create buying opportunities, especially when driven by market sentiment rather than fundamentals. Historically, market corrections of 10% or more are common but long-term investors have still enjoyed solid returns.
The report states that elections and Fed rate cuts may also impact the market, with rate cuts typically benefiting large-cap and high-quality stocks. Healthcare and consumer staples sectors have traditionally performed well after rate cuts, while cyclical sectors may improve as the economy recovers.
Finally, it mentioned that technology, which is usually a laggard in rate-cutting cycles, looks well-positioned this time due to innovations like AI. Long-term patience is essential in navigating volatility, as the market has proven resilient over decades through various crises.
READ ALSO 8 Best Communication Stocks To Buy According to Analysts and 10 Worst Performing Blue Chip Stocks in 2024
Evaluating Volatility and Valuations in Today’s Stock Market
In a CNBC interview, chief strategist and economist of Solus Alternative Asset, Dan Greenhaus discussed stock market volatility, with mega-cap earnings and the upcoming election contributing to potential fluctuations. He mentioned that the market is already experiencing some volatility, as reflected in the elevated VIX. Despite this, he highlighted that the economy is still growing, albeit at a slower pace, and earnings are rising, which is creating a generally favorable environment for equities.
Greenhaus also addressed concerns about market valuations and noted that while current multiples are high historically, determining what constitutes “rich” valuation levels can be difficult without hindsight.
Lastly, Greenhaus referenced a trading strategy of “buying high and selling higher,” suggesting that investors should remain engaged in the market even during record highs.
With that, we look at the 10 Worst Performing Dow Stocks Year-to-Date.
10 Worst Performing Dow Stocks Year-to-Date
Our Methodology
For this article, we checked the year-to-date performance of all the Dow components and selected 10 stocks out of 30, that had the worst share price performance on a year-to-date basis on October 21. We listed the stocks in descending order of their share price performance. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Performing Dow Stocks Year-to-Date
10. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 92
Share Price Performance Year-to-Date: 6.5%
The Walt Disney Company (NYSE:DIS), commonly known as Disney, is an American multinational entertainment and media conglomerate headquartered in California. It is known for its diverse portfolio, including its renowned film studios, television networks and direct-to-consumer streaming platforms such as Disney+ and Hulu. The company also manages a wide range of theme parks, resorts, and consumer products.
Disney (NYSE:DIS) had a strong start to the year as its stock performed well in the first quarter. However, its decline started in the second quarter and was highlighted by Meridian Funds in its Meridian Hedged Equity Fund’s Q2 2024 investor letter. The firm said that the company’s stock struggled in the quarter mainly due to worries about slowing growth in its theme park division.
Although park revenue increased by 10% compared to last year, management indicated a decline in post-pandemic demand and rising costs, which resulted in a less optimistic outlook for park operating income for the second half of the year.
Furthermore, according to Goldman Sachs, the company’s Parks and Experiences segment may lose between $150 million and $200 million due to Hurricane Milton, as reported by WSJ. This potential loss would be greater than the $100 million impact Disney experienced from Hurricane Irma in 2017. It is one of the worst-performing Dow stocks on a year-to-date basis.
Despite all that, Disney (NYSE:DIS) is a fundamentally strong company with significant future growth prospects. You can read about it here: The Walt Disney Company (DIS): A Bull Case Theory.
9. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 67
Share Price Performance Year-to-Date: 6%
McDonald’s Corporation (NYSE:MCD) is a global leader in the fast food industry, known for its widespread presence and iconic menu items. With a diverse menu featuring its famous burgers, fries, and seasonal offerings, the company serves millions of customers daily across more than 100 countries. The company also generates revenue through real estate and owns a large percentage of its restaurant properties.
McDonald (NYSE:MCD) is 9th on our list of worst-performing Dow stocks. Its challenges were highlighted by CEO Chris Kempczinski at the company’s Q2 earnings call. He mentioned that the company faced challenges due to a more cautious consumer base, especially among lower-income households. He noted a significant slowdown in the quick-service restaurant (QSR) sector, with declining traffic in major markets like the U.S., Australia, Canada, and Germany, compounded by geopolitical tensions in the Middle East.
These factors led to a drop in comparable sales across all segments. Moreover, the CEO also discussed internal challenges, he said:
“But there were also factors within our control that contributed to our underperformance, most notably our value execution.”
Nevertheless, McDonald’s (NYSE:MCD) year-to-date share price decline is mostly due to its abysmal performance in the first half. Between July 1 and October 21, the stock has gained nearly 26% which shows that it’s on a decent path to recovery.
Moreover, the company’s $5 menu is being applauded by many as Mad Money host Jim Cramer said:
“Kudos to McDonald’s for recognizing they have to come up with a cheap alternative that people can afford, I wish other companies would follow suit.”
On October 15, The Fly reported that Morgan Stanley analyst Brian Harbour increased McDonald’s (NYSE:MCD) price target from $296 to $340 and maintained an Overweight rating on the stock before its third-quarter results. He noted improvements in the company’s U.S. business, which helped lift the stock from a slump in the second quarter.
However, he indicated that international performance might still face challenges, leading to a “mixed” outlook for the quarter. While Morgan Stanley plans to approach the upcoming earnings report with some caution, it expects the company’s performance in fiscal year 2025 to be similar to this year.
8. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 50
Share Price Performance Year-to-Date: 5.98%
Eighth on our list of worst performing Dow stocks is Honeywell International Inc. (NASDAQ:HON), which is an American conglomerate that serves a wide range of industries globally. Its services include aerospace technologies, energy-efficient solutions, specialty chemicals, and advanced materials. The company is planning to spin off its advanced materials segment which is expected to be completed by the end of 2025 or the start of 2026.
While Honeywell’s (NASDAQ:HON) stock has been recovering over the last few weeks, gaining over 10% in the last 30 days, the stock faced some challenges in the first half. In Q1, the company experienced a decline in its Building and Industrial Automation segments due to reduced demand for short-cycle products.
After its Q2 report, the stock declined after its earnings report, where it lowered its EPS guidance due to continued slower recovery in its short-cycle business. Margins were under pressure due to the mix of lower-margin short-cycle business recovery.
On October 8, TipRanks reported that Analyst Nicole Deblase from Deutsche Bank kept a Hold rating on Honeywell (NASDAQ:HON) and reduced the price target from $236 to $226. She made this decision because the company plans to spin off its Advanced Materials business to focus on key areas like aerospace, automation, and energy transition.
The analyst warned that this spin-off might cause a 10% drop in revenue and a similar decrease in earnings per share, although share buybacks could help lessen the impact.
Deblase believes that the Advanced Materials division could still perform well as a separate company, but she showed caution. She pointed out that the company has not done as well as its competitors, which raises questions about its overall business model. While she doesn’t foresee a major breakup of the company beyond this spin-off, she believes any future asset sales will be smaller.
7. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
Share Price Performance Year-to-Date: 5.96%
UnitedHealth Group Incorporated (NYSE:UNH) is a multinational health insurance and services company. It operates primarily under two brands: UnitedHealthcare, which offers a range of insurance products, and Optum, which provides various healthcare services. It is one of the largest healthcare companies by market cap. It is the 7th worst-performing Dow stock.
UnitedHealth (NYSE:UNH) faced several challenges in the year that affected its share price, which included its subsidiary, Charge Healthcare, experiencing a cyber attack in mid-February that disrupted its claims processing. Then on February 28, WSJ reported that the U.S. Justice Department has launched an antitrust investigation into the company, focusing on its relationships between the UnitedHealthcare insurance unit and its Optum health services division.
Investigators were examining how Optum’s acquisitions of physician groups may affect competition, especially whether UnitedHealthcare favors these groups in contracting. The probe also included scrutiny of Medicare billing practices related to documenting patient illnesses.
In addition, UnitedHealth (NYSE:UNH) reported its earnings on October 14, after which, the company’s stock experienced a huge plunge. While the company reported strong earnings, it set its 2025 earnings outlook at a maximum of $30 per share, falling short of Wall Street’s consensus estimate of $31.17.
Although the insurance provider’s 2024 guidance was in line with expectations, CEO Andrew Witty noted that the conservative forecast is largely due to factors affecting its UnitedHealthcare unit, including payment cuts from Medicare, changes related to the Inflation Reduction Act, and discrepancies between Medicaid rates and medical benefits.
Despite that, on October 18, The Fly reported that TD Cowen increased its price target for UnitedHealth (NYSE:UNH) from $601 to $609 and maintained a Buy rating on the stock. The firm adjusted its financial model after reviewing the company’s Q3 results and is now looking forward to the Investor Day on December 4th. At that event, the firm expects to get clearer insights into the company’s earnings per share for 2025, membership in Medicare Advantage plans, and updates on the Medicaid rate situation.
6. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Share Price Performance Year-to-Date: 1.79%
One of the worst performing Dow stocks, Johnson & Johnson (NYSE:JNJ) is an American multinational in pharmaceuticals, biotechnology, and medical technologies company. The company has made significant contributions to healthcare, pioneering sterile surgical products and the first commercial first aid kit. It has a history of innovation, including the invention of the Band-Aid in 1920 and several surgical technologies.
Johnson & Johnson (NYSE:JNJ) is dealing with over 62,000 lawsuits alleging that its talc products, including baby powder, is contaminated with asbestos and cause health issues like ovarian cancer. To handle these legal challenges, its subsidiary, Red River Talc, filed for bankruptcy as part of a strategy to address the claims.
The company, maintaining that its products are safe, has proposed a nearly $10 billion settlement. However, opponents of the plan are challenging the bankruptcy, potentially moving the case to New Jersey.
The company continues to face uncertainty over ongoing talc litigation, which has weighed on its stock performance. The company’s latest effort to resolve these liabilities involves a third attempt to place its talc-related subsidiary into bankruptcy, this time in Texas, with support from 83% of plaintiffs. If successful, this move could ease investor concerns.
On a positive note, Johnson & Johnson (NYSE:JNJ) reported strong third-quarter earnings, with sales of $22.5 billion, a 5.2% increase from the previous year, and adjusted earnings of $2.42 per share, exceeding analysts’ estimates by $0.21.
The acquisitions of Shockwave, V-Wave, and others have strengthened the MedTech and Innovative Medicine segments. Key medicines like DARZALEX, which surpassed $3 billion in sales and became the company’s first product to do so in a single quarter. The launch of new therapies such as RYBREVANT and TREMFYA, contributed significantly to this growth.
For 2025, Johnson & Johnson (NYSE:JNJ) is confident in continued growth for its Innovative Medicine segment, despite losses from STELARA biosimilar entries. Product contributions are expected from TREMFYA and RYBREVANT, with new approvals and pipeline progress across priority platforms.
5. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 64
Share Price Performance Year-to-Date: 0.94%
Chevron Corporation (NYSE:CVX) is a global energy company with a significant presence in oil, natural gas, and is also making moves in alternative energy sectors. It operates in over 180 countries and is engaged in oil and gas exploration, production, refining, and marketing, along with power generation.
While Chevron (NYSE:CVX) is a strong company, its price decline is tied to its industry. As of October 18, the Energy Select Sector SPDR Fund (XLE) has gained slightly over 6.5%, underperforming the broader market significantly. It is one of the reasons why the company has been one of the worst performing Dow stocks.
According to the International Energy Agency’s (IEA) September report, global oil demand growth is slowing down, with only an increase of 800 thousand barrels per day (kb/d) in the first half of 2024, the lowest increase since 2020. The decline is mainly due to a significant drop in oil use in China, which saw a decrease of 280 kb/d in July, marking the fourth straight month of lower demand. IEA projects that global oil demand is expected to grow by 900 kb/d in 2024, down from 2.1 million barrels per day (mb/d) last year, and by only 950 kb/d in 2025.
In addition to that, Chevron (NYSE:CVX) is engaged in a competitive bid with Exxon Mobil for a $53 billion acquisition of Hess, which holds a significant stake in Guyana’s oil-rich Stabroek block. Exxon has filed an arbitration claim to potentially block the merger and argued that it has the right of first refusal on Hess’ Guyana assets due to its majority stake in the consortium. This could delay Chevron’s (NYSE:CVX) deal, with Exxon leaving open the option of a settlement.
Analysts are still bullish on the company as 19 out of 27 analysts that have covered the stock maintain a Buy-equivalent rating on it. On October 17, The Fly reported that Bank of America resumed its coverage of the company stock with a Buy rating and a price target of $168.
BofA believes that the recent decline in Chevron’s (NYSE:CVX) stock value, influenced by its acquisition of Hess, has caused a temporary drop in its rating. However, the firm believes that the oil giant’s core business is strong and offers good value at its current price.
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 96
Share Price Performance Year-to-Date: -6.09%
Merck & Co., Inc. (NYSE:MRK) is an international healthcare company that offers advanced health solutions through prescription drugs, vaccines, biological therapies, and animal health products. The company emphasizes research and development, aiming to address various health conditions, such as cancer, infections, and cardiovascular diseases. It takes the 4th spot on our list of worst performing Dow stocks.
One of the main reasons for Merck’s (NYSE:MRK) declining performance has been concerns about Keytruda’s U.S. patent expiring in 2028, which have led to lower stock prices. Moreover, the company stock was performing relatively well before its Q2 earnings (still slightly below the broader market). The stock declined significantly after it cuts its earnings forecasts for 2024.
While the company posted strong earnings, beating the revenue and EPS estimates, it narrowed its non-GAAP EPS to the range of $7.94 and $8.04, compared to the prior $8.53 to $8.65 per share. Between July 29 and 31, the company stock dropped nearly 11.5%.
However, Merck (NYSE:MRK) is still a strong company and it is strengthening its pipeline significantly. The company’s significant achievements include the successful launch of WINREVAIR, a new treatment for pulmonary arterial hypertension, and the FDA approval of CAPVAXIVE, the first pneumococcal conjugate vaccine specifically for adults.
While the acquisition of EyeBio is one of the reasons for its narrowed earnings forecasts, the impact seems to be a one-time thing according to the company management and improves the company’s ophthalmology portfolio for the future. The company’s management believes that its pipeline is ready for substantial growth, with a potential for launching as many new drugs in the next five years as in the previous decade.
Oakmark Equity and Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm with leading oncology, vaccine and animal health franchises. Premier products in Merck’s portfolio include Keytruda, Gardasil, Winrevair and Bravecto. Outsized contributor Keytruda is an immuno-oncology drug that treats several cancers and tumors. Keytruda is an astounding clinical and commercial success that is on track to become one of the best-selling prescription drugs to date. Investor angst surrounding Keytruda’s pending U.S. patent expiration in 2028 presented a chance to buy shares at a discounted valuation. We believe opportunities to extend Keytruda’s duration through life cycle management are underappreciated. More importantly, discounted cash flows from products already on market cover today’s entire stock price, meaning there is minimal value ascribed to a promising pipeline with strong sales potential. We believe Merck is led by a capable management team that looks to reinvest these cash flows in an accretive manner.”
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 66
Share Price Performance Year-to-Date: -23.53%
NIKE, Inc. (NYSE:NKE) designs, develops, and markets athletic footwear, apparel, equipment, and accessories. It stands as the leading global seller in this sector. The company operates through both direct sales through NIKE-owned stores and digital platforms and wholesale channels that include independent distributors and licensees across numerous countries. Most of its products are manufactured by independent contractors outside the U.S.
Some of NIKE’s (NYSE:NKE) main issues include intense competition, declining earnings and revenue, and a weak revenue forecast for fiscal Q2. In fiscal Q1 2025, while the company beat the earnings estimates by $0.18 after reporting an EPS of $0.70, they were down 26% year-over-year. The revenue missed the estimates by $50 million and declined by 10%.
The results met the company’s expectations but showed lower-than-anticipated unit sales, especially in NIKE Digital and partner stores in Greater China. The company is intentionally reducing its reliance on classic footwear franchises, leading to a decline in revenue from these products. As the company shifts its product portfolio, it expects continued challenges in the short term, especially in its lifestyle and Jordan brand sectors.
NIKE (NYSE:NKE) expects that Q2 revenues will also decline, with projected gross margins impacted by higher promotional activity and supply chain challenges. Moreover, the company has been seeing quite a neutral sentiment from analysts for the near term as well. The latest Hold ratings were given by Piper Sandler and UBS on October 11 and 15, respectively. The price targets of $80 and $82 also show a slight downside to the company stock as of October 18.
Coho Partners stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“While we believe each of those companies is performing in line with or better than our expectations and that the moves lower are unjustified, both CVS and NIKE, Inc. (NYSE:NKE) reported disappointing performance in recent results. For Nike, the company reported mixed fourth quarter Fiscal 2024 results and weak Fiscal 2025 guidance, reflecting top line pressure from lifestyle product slowing, lower digital sales and increased macro headwinds in international markets. To manage through the decline in sports footwear and apparel demand, the senior leadership team is focused on cutting costs and reinvesting in marketing and innovation to drive sales. The company is starting to see green shoots for performance product innovation and has historically emerged stronger from these downturns due to benefits from a leading market position and scale.”
2. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 42
Share Price Performance Year-to-Date: -36.52%
The Boeing Company (NYSE:BA) is an American company that specializes in the design, manufacture, and sale of airplanes, rotorcraft, rockets, satellites, and defense equipment worldwide. Its diverse operations are organized into three main divisions: Commercial Airplanes, Defense, Space & Security, and Global Services. It is also a major exporter and continues to influence industries ranging from aviation to space exploration.
Boeing (NYSE:BA) has been facing significant challenges for a while now, which include, labor strikes, management changes, a deteriorating credit profile, and several consecutive years of earnings losses. In the second quarter of 2024, the company missed both revenue and earnings per share estimates, with a continued decline in 737 MAX deliveries. Its cash burn also worsened, and its leverage ratio rose significantly.
As reported by TipRanks on October 21, Bank of America Securities analyst Ronald Epstein maintained a Hold rating on Boeing (NYSE:BA) with a $170 price target. The analyst’s cautious stance is influenced by several factors. While the recent labor proposal between the company and the International Association of Machinists (IAM) leadership represents progress, it still requires union member approval, making the outcome of the vote critical to resolving the ongoing strike affecting operations.
Additionally, uncertainties persist, especially regarding pension cuts that could impact employee morale. The company is also facing challenges such as potential equity raises and workforce reductions.
On the other hand, Peter Arment from Robert W. Baird reiterated a Buy rating on Boeing (NYSE:BA) with a price target of $240. The analyst views the strategic contract agreement with the IAM union in a positive light. It aims to resolve the ongoing strike and includes significant wage increases and bonuses likely to gain member approval. The agreement is expected to stabilize operations and improve workforce morale.
Additionally, the company’s plans to raise equity capital and reduce its workforce are expected to strengthen its balance sheet and lower cash interest costs.
1. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Share Price Performance Year-to-Date: -52.22%
Intel Corporation (NASDAQ:INTC) is a global technology leader known for designing and manufacturing a range of computer components, including microprocessors, chipsets, and networking devices. It has been instrumental in shaping the modern computing industry.
It is known for its contributions to both the consumer and enterprise markets, supplying processors to major tech companies, and maintaining a strong presence in the PC and server industries.
Intel (NASDAQ:INTC) tops our list of worst-performing Dow stocks as it faced a plethora of issues in 2024. It fell short of expectations despite progress in product and process developments in Q2. The company faced challenges, including new export restrictions and faster ramping of AI CPUs, which pressured margins.
Moreover, its struggling foundry business and a drop in PC chip sales were one of the main reasons for its decline. The company has faced heavy competition from Taiwan Semiconductor and reported significant losses, including a $2.8 billion operating loss in the second quarter, totaling $5.3 billion for the first half of the year.
Nevertheless, Intel (NASDAQ:INTC) is planning to make some amends for the future and has planned a cost reduction initiative, including a 15% headcount reduction by 2025, reducing operating expenses to $17.5 billion in 2025, with further reductions expected in 2026. Capital expenditures will also decrease, with gross CapEx for 2024 targeted between $25 billion and $27 billion, and net spending between $11 billion and $13 billion. The dividend will be suspended to prioritize liquidity for long-term investments.
Here is what ClearBridge Large Cap Value said about Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
While we acknowledge the potential of Intel Corporation (NASDAQ:INTC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than INTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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