Dow Futures

The Dow Jones Industrial Average (INDEX: ^DJI  ) looks as if it’s calling it quits after its three-month 7% climb that started 2012 with a bang. The Dow fell 125 points, or -0.95%, to close the day at 13,074. It’s down from its 52-week high of 13,331, and it’s flirting with the psychological 13,000 threshold yet again.

The negative news hitting markets today includes the Federal Reserve’s backing away from further quantitative easing, and even more debt troubles from the eurozone. The Dow stocks that took the news the hardest today? Bank of America (NYSE: BAC  ) , Alcoa (NYSE: AA  ) , and Microsoft (Nasdaq: MSFT  ) . While no one likes to see the index down some 1%, putting the year-to-date performance in perspective, today’s drop doesn’t seem so bad — maybe even necessary.

Please enable JavaScript to view this video.

While it’s always nice to know where the market is headed on a particular day, here at the Fool we think watching it swing wildly one day to the next is a big mistake. Instead, we advocate buying great companies and holding them for the long run. Not only is this better for your portfolio, but it also keeps you sane. Our chief investment officer has recently identified yet another incredible long-term candidate. He’s called it The Motley Fool’s Top Stock for 2012, and you can learn about this stock Wall Street still doesn’t know about by clicking here now.

The Dow Jones Industrial Average (INDEX: ^DJI  ) comprises some of the greatest companies of our time. All 30 components pay a dividend, and many are considered the safest investments on the market. The Dow is arguably the most tracked of the major indices, and it’s regarded as a fair barometer of the overall stock market’s health.

Yet despite this perceived stability, there are still hugely disparate returns within the index. In just this year alone, Bank of America (NYSE: BAC  ) has run up an astonishing 75%, while Hewlett-Packard has lost a disappointing 8.5%.

So I set out to learn what separated the dogs from the darlings.

The foolish view
As a long-term Foolish investor, I wasn’t interested in year-to-date performance. I wanted the real deal, so I looked at how each Dow stock has performed over the past decade. The results were striking. The spread from the best to the worst return was a sky-high 433%. Here’s a look at the top three and bottom three performers.

10-year return assumes dividend reinvestment.

So what do Caterpillar and McDonald’s have that Alcoa and Bank of America don’t? The answer is hidden in plain sight: brand strength.

Who’s got it
By nature of being intangible, brand strength is subjective and difficult to calculate. I therefore deferred to the pros at Interbrand, whose annual ranking of the top 100 global brands is the de facto brand-strength baseline.

The company calculates that top performers Caterpillar and McDonald’s have brand strengths of $6 billion and $36 billion, respectively. While about half of the Dow components made the top 100 list, bottom performers Bank of America and Alcoa didn’t. The majority of the Dow brands that made the list are in the top 15 performers of the past decade, and they command an aggregate brand value of about $50 billion more than the bottom 15 companies (of those that we’re ranking). If Hewlett-Packard moved up even one spot, this spread would have grown to $106 billion. The top three brands on the list are all Dow components, as are eight of the top 10 ranked companies.

The value of a brand
The good news for investors is that brands matter to the bottom line. A McKinsey Quarterly study once showed that strong brands cause people to make more frequent visits, spend more, and pay premiums. A StrategiCom study also concluded that “the evidence [does] point to the fact that in most industries, having better perceived brand strength generally [does] correlate to having a higher share returns.”

Interbrands rankings also confirms this finding. The total five-year return of the five most valuable brands on this list in an equally weighted portfolio would have returned 51%, compared with just 14.5% for those ranked 95-100. I went with a five-year return because Google is a top-rated brand but only went public in 2004.

How to use it
It’s not an absolute correlation, though. Brand wunderkind General Electric has been in the top five most valuable brand rankings for the past decade, yet it was one of the worst-performing Dow components over the same period. The implosion of GE Capital is the obvious culprit here. Backing out the decade’s performance up to the financial crisis, General Electric would have been seen outperforming its peers by a wide margin.

In addition, the most valuable brand here was not the best-performing Dow stock of the past decade. So as investors, you shouldn’t use brand strength as super-metric for determining your investments. Instead, it should be a bullet in your investing chamber, giving you extra conviction or skepticism about a certain company. Maybe you pay a little more in terms of valuation for a company with a strong brand, but looking at these long-term returns, I’d say it’s worth it.

The Dow Jones Industrial Average (INDEX: ^DJI  ) finished the day down after a report from the National Association of Realtors said that U.S. existing-home sales fell 0.9% to a seasonally adjusted 4.59 million. However, some stocks did much better than the Dow as a whole.

Source: Google Finance.

Source: Google Finance.

Today’s Top 3

1. Today’s leader was Home Depot (NYSE: HD  ) , up 0.83% to $49.79. The stock is up for a second day in a row, after the Department of Housing and Urban Development reported that building permits rose 5% month-over-month in February to a seasonally adjusted 717,000. That’s up 34% from last February’s 534,000. Fool analyst Sean Williams recently called Home Depot a great dividend stock you could buy right now. He believes Home Depot will do well no matter which way housing numbers go, as any activity in the housing market is good for the company.
2. Coca-Cola (NYSE: KO  ) was second behind Home Depot today, finishing up 0.75% [$0.53] to end the day at $71.12. The only news to report today is that the company is adding Chinese-language ads to the courtside signs at Madison Square Garden to cash in on Linsanity. The stock has been slowly moving upward the past week and has now risen 2.32% in the past five days. While there is no specific news, Fool analyst Austin Smith believes Coca-Cola is a dividend stock your kids will thank you for.

3. Verizon (NYSE: VZ  ) took third for the day, up 0.38% [$0.15] to end at $39.78, after a positive Senate hearing before the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights on its deal for spectrum with cable providers Comcast and Time Warner Cable. Congressional support is important for the deal to win regulator approval. Last year, subcommittee Chairman Sen. Herb Kohl (D-Wis.) argued against AT&T‘s failed purchase of T-Mobile.

The best approach
Watching the broad market each day is exciting, gut-wrenching, and stressful, but investing doesn’t have to be. If you’re in the mood to pick up a few great companies to buy for the long term, The Motley Fool has created a brand-new free report: “3 Stocks That Will Help You Retire Rich.” It features three stocks to help you build a smarter retirement portfolio. Get access to the report and find out the name of these three companies. The report is free but won’t be forever, so check it out today.

Mr. Market has been on one heck of a climb for the year. The Dow Jones Industrials Average (INDEX: ^DJI  ) is up almost 8% year to date, and has climbed from 12,700 to 13,289 in this month alone. Today’s down day seems more like a breather than anything else. That doesn’t mean there aren’t trends to watch though. Here is a look at how the three major indices fared today, the macro news moving markets, and the two Dow stocks that gained or lost the most today.

Global jitters
While Europe has been at the forefront of most investor’s global concerns, it looks like another region of the world has been building problems of their own. Today, it is slowdown fears in China that are sending chills. BHP Billiton, the world’s largest miner, said that iron ore demand from the country is “flattening.” Coupled with fears about an overinflated housing market in the country, it’s easy to see why shares would dip.

Worries from China pushed gold, oil, and silver funds lower today. The Market Vectors Oil Services ETF (AMEX: OIH  ) closed the day down 1.8%, more than three times the Dow’s fall. The U.S. Oil & Gas Exploration and Production Index Fund (AMEX: IEO  ) fell five times the loss on the Dow, with a 2.5% decline for the day. This makes sense, as oil and gas exploration tends to be the most boom-and-bust subsector of the oil and gas industry.

Specific pops & drops

• Bank of America (NYSE: BAC  ) was the top performing Dow stock of the day, rising 2.9%. This added to the company’s already ridiculous 76.4% year-to-date gain. It’s been a two-part push for the big bank: Originally they were buoyed by positive economic numbers, and then they built off that rise with positive stress-test results. It’s been a great year to be in banking stocks, and some Fools think Bank of America could be the Dow’s stop stock of 2012.
• Caterpillar (NYSE: CAT  ) was the biggest Dow loser today, falling 2.61%. The company has put up huge growth numbers recently, particularly with their emerging-market mining growth. It makes sense they would dip today on China growth fears, but with the equipment maker still up 23% for the year, today’s pullback isn’t anything to sweat over.

The best approach
Watching the broad market each day is exciting, but also gut-wrenching and stressful, but investing doesn’t have to be. If you’re in the mood to pick up a great company to buy for the long term, The Motley Fool has created a brand-new free report, “The Motley Fool’s Top Stock for 2012.” It features a company hand-selected by the Fool’s chief investment officer that has a strong future ahead of it. Get access to the report and find out the name of this legendary company. The report is free, but won’t be forever, so check it out today.

A rising stock market continued to reflect the enthusiasm that investors have about the overall economy. Even though the Dow Jones Industrials (INDEX: ^DJI  ) finished up just 7 points, closing at 13,239, other parts of the stock market did much better. The small-cap Russell 2000 (INDEX: ^RUT  ) index jumped nearly 1%, and the Nasdaq and S&P also rose, but bond yields continued to climb as some now believe that the decades-long bull market in bonds is in danger of ending.

Some stocks didn’t get join in the fun on Monday. Let’s take a closer look at three of them.

Bank of America (NYSE: BAC  ) , down 2.7%
It would be easy to read something sinister into B of A’s performance today. But in reality, it’s probably just a break from the stock’s huge 2012 run.

Earlier today, B of A shares touched the $10 mark for the first time since last summer before falling back. For the stock to make further progress, it would be ideal for the company to show improvement in dealing with its legacy mortgage issues. Those are the biggest obstacles standing in the way of a full recovery for the bank.

Microsoft (Nasdaq: MSFT  ) , down 1.2%
Microsoft is giving up ground on a generally good day for tech stocks. But at least one analyst thinks this is a dip that investors should buy.

Hilliard Lyons stuck by its buy rating on Microsoft, raising its price target to $37 based on its expectation that Windows 8 will help the software giant integrate an ecosystem of its own. Between its Xbox game system, Office software, Bing search, and Windows Phone products, Microsoft has the capacity to build a one-stop experience. Whether it can execute or not remains to be seen … as the lack of interest in the shares today seems to suggest.

United Technologies (NYSE: UTX  ) , down 1.0%
I didn’t see any company-specific news pushing United Technologies down today. But one troubling trend could spell problems for the conglomerate and its defense-related segments going forward.

With Treasury yields on the rise, borrowing costs for the U.S. government could be in line to soar. That would put even more pressure on an already-burdened budget, which could prompt more defense cuts that could eventually hit United Tech and the defense contractors it does business with. Until the government can get its own balance sheet in order, rising rates will remain a threat.

Stay on your toes
If your Dow stocks aren’t delivering the returns you want, don’t stop looking. Be sure to check out the Motley Fool’s latest special report on retirement, which highlights three promising stock picks for retirement investors. Don’t wait; get your free report today while it’s still available.

The Dow Jones Industrial Average (INDEX: ^DJI  ) is one of the oldest measures of the stock market still in use today. But if the Dow’s idiosyncrasies are causing to lose money, then don’t you owe it to yourself to think about investing in Dow stocks a different way?

With exchange-traded funds, investing in the Dow has never been easier. But some argue that it emphasizes some stocks unfairly while virtually ignoring others. So I’ll take a look at another way to invest in Dow stocks and ask whether it can bring you even better returns. First, though, let’s try to understand what it is about the Dow that creates this potentially exploitable opportunity.

The ultimate in simplicity
The beauty of the Dow is that unlike most market benchmarks, it’s easy to calculate. You don’t need to know what each company’s market capitalization is, and you don’t need to look at financial statements to figure out earnings, dividends, or any other fundamental information about the company. All you need are 30 share prices and a fudge-factor known as the Dow divisor to figure out the current level of the Dow at any particular time.

But that lack of additional information rubs some people the wrong way. Because price is the only factor it incorporates, the Dow gives high-priced stocks more weight than lower-priced ones. Moreover, when a company decides to do a share split to reduce its stock price, it loses a big part of its influence in the Dow’s returns.

Simpler still?
One obvious way to fix the problem would be to use a market-cap-weighted Dow, just as the S&P 500 and many other benchmarks are calculated. But then, some would inevitably argue that the small caps in the Dow were getting ignored.

Many index researchers have argued that equal weighting consistently allows you to outperform market-cap-weighted indexes. With broader-based indexes, equal weighting captures the tendency of smaller-cap stocks to outperform their larger counterparts over the long run. With the narrower Dow, however, there’s no guarantee that the same phenomenon will appear — especially since nearly all of the Dow’s stocks are megacap giants.

The truth is out there
When I considered this idea last month and took a look at 10-year returns, the equal-weighted average beat the Dow. But surprisingly, a look at the more recent past reveals the opposite: The Dow has held its own against an equal-weight strategy in recent years and has soundly outperformed it over the past year. Averaging the total returns of all 30 Dow stocks and comparing the result with returns on the Dow-tracking SPDR Diamonds ETF since June 8, 2009 — the last time changes were made to the Dow’s component stocks — showed almost identical performance with both methods.

Moreover, since last March, equal weighting has actually lagged the Dow by 4 percentage points. Similarly, the Dow’s price-weighted measure did better throughout both 2010 and 2011.

What’s behind the numbers?
The key to these results is in where the top performance in the Dow has come from recently. Tech behemoth IBM (NYSE: IBM  ) has outperformed the Dow soundly since mid-2009, as its emphasis on essential information-technology services helped it avoid some of the problems that more equipment-focused companies suffered during the recession. Similarly, although its performance has been less consistent given that it suffered a small loss in 2011, Caterpillar (NYSE: CAT  ) has had the best returns of any Dow stock over that nearly three-year period. That strong performance has come from two critical strategic decisions: focusing on high return-on-equity investments and being willing to take on significant leverage on its balance sheet to accelerate its growth.

By contrast, the worst performers have had relatively small share prices for a long time. Alcoa (NYSE: AA  ) has had problems dealing with a glut of aluminum supply at extremely low prices, which has largely kept it from enjoying the fruits of the global recovery over the past few years. And despite its recent advance, Bank of America (NYSE: BAC  ) suffered extreme losses as a result of its mortgage liabilities, and even since the end of the crisis, B of A in particular has struggled to get enough capital and try to get past its toxic-asset problems. Yet collectively, Alcoa’s and B of A’s low share prices have sheltered the price-weighted Dow from the worst of its losses — while an equal-weighted average bears the full brunt of the companies’ woes.

Keep searching
Despite its flaws, the Dow serves the valuable purpose of giving the general public a simple, easy-to-understand snapshot of the stock market. The Dow wouldn’t have survived as long as it has if it didn’t have some value in helping investors reach their financial goals.

If you want to beat the Dow, you may need different stocks to do it. The Motley Fool’s latest special report on retirement will point you in the right direction, with three promising stock picks for long-term investors. Don’t wait; get your free report today while it’s still available.

The Dow Jones Industrial Average (INDEX: ^DJI  ) continued roaring this past week, tacking on 2.4% in gains to close at 13,262 on Friday. One simple fact shows just how broad -based the rally was this week: Every single Dow stock, all 30 of them, closed the week in positive territory. The worst-performing Dow stock, Procter & Gamble (NYSE: PG  ) , posted a 0.5% gain!

Still, not all gains were created equal. Here’s a list of the week’s three best-performing Dow stocks.

Source: S&P Capital IQ.

Banking stocks led the rally this week. As fellow Fool Matt Koppenheffer noted, the financial sector as a whole posted a 5.1% gain on the week, making it the best-performing sector in the market. The reasoning for the sector’s rally was simple: positive results out of recent banking stress tests.

Shares of Bank of America and most of its peers are well off their 52-week highs while the rest of the market takes off. That’s because earnings continued to be mired at low levels, Bank of America still is earning less than a tenth of what it earned back in 2005, and concerns remain about whether banks are as sufficiently capitalized as they need to be.

With stress tests assuming a worst-case scenario of unemployment at 13%, housing down 21%, and the Dow at 6,000, every bank except Ally Financial exceed a minimum 5% Tier 1 common capital ratio. The results don’t mean the financial industry is ironclad, but it does lessen investors’ fears of a worst-case scenario. With banking stocks extremely depressed, that was enough to cause a buying spree across financials.

Similar to banking, Alcoa is well off its 52-week high and has been aggressively sold off by investors who fear that any macro hiccup could cause the company a healthy dose of damage as aluminum prices stayed depressed. So it’s only natural that with hopes for the global economy rising in line with market gains, Alcoa would be among the leading gainers in any broad rally.

Another way to profit
It’s not every week we’ll see a 2.4% gain that sent even some of the worst-run companies soaring, and it’s the best-run companies that will thrive in the long run. Learn about the one stock the Fool’s chief investment officer picked to crush the market in this free report: “The Motley Fool’s Top Stock for 2012.” Instant access is just a click away.

We’ve all heard about having a case of the Mondays, but it looks like the Dow Jones (INDEX: ^DJI  ) is taking the day off and watching some March Madness. Shortly before 2 p.m., the index sits down just 0.5, essentially a rounding error to being flat. The Dow had opened higher after Europe’s FTSE 100 (INDEX: ^FTSE  ) ended the day up 0.42% on the end of banking gains.

That’s not to say today isn’t an active market day. Volume is heavy for a number of Dow stocks. Like its banking brethren in Europe, Bank of America (NYSE: BAC  ) is taking off. The company has already handily passed its average trading volume for the day and is up 3.9% despite little news on the day. The cause of Bank of America’s gain today is likely linked to the afterglow of the company’s passing the latest round of stress tests. In total, Bank of America is up 19.5% this week and has notched a 75% gain this year.

In spite of the market’s malaise today, the overriding story is that in the week stocks continued their upward gain. The S&P 500 (INDEX: ^GSPC  ) is up about 2.4% on the week, led by — you guessed it! — the banking sector. The S&P Bank ETF (NYSE: KBE  ) was up 7.8% this week. In the fourth quarter, banking stocks posted only 3.6% year-over-year growth in earnings, a far cry from technology’s earnings growth of 17.1% or energy’s 13.4% leap. However, many top banking stocks were punished last year, so signs of an improving economy and stress test results that were better than expected have brought investors back into the space.

Keep your perspective
Not all weeks will feature 2.4% gains like this week that sent even some of the worst-run companies soaring; it’s the best-run companies that will thrive in the long run. Learn about the one stock the Fool’s chief investment officer picked to crush the market in this free report: “The Motley Fool’s Top Stock for 2012.” Instant access is just a click away.

The Dow Jones Industrials (INDEX: ^DJI  ) is the one single measure of the stock market that the most people are familiar with. With its 30 component companies, the Dow has a manageable number of stocks while still representing most of the industries in the U.S. economy.

But because of a quirk in the way it’s calculated, the Dow doesn’t give every company the weight it deserves. Later in this article, I’ll talk about four companies that get short shrift from the Dow. But first, you need to understand why the Dow misses out on the full potential of some of its most promising companies.

Why the Dow has a weight problem
Behind every market benchmark is a set of procedures used to calculate it. The most important part of figuring out any index is determining how much weight to give to each of its component stocks.

Most market measures, including the S&P 500 and the Russell 2000, assign weights to their stocks based on market capitalization. So the stocks with the biggest market cap have the most influence on the index, while smaller stocks get less weight.

But the Dow is unusual in that it’s a price-weighted measure. So regardless of how big a company happens to be, the only thing that determines how much weight it gets in the Dow is what its share price happens to be. So stocks with high prices count the most in the Dow, while low-priced stocks have much less influence — even if their market caps happen to be extremely high.

4 stocks that you can’t ignore (even though the Dow does)
Unless you plan to invest directly in the Dow, though, its weighting mechanism isn’t important to you. You just want the best stocks you can find — regardless of their share prices. So I looked at four stocks that have plenty of potential but happen to have low-priced shares currently.

General Electric (NYSE: GE  )
Arguably the most diverse conglomerate in the U.S., GE has businesses that range from alternative energy and medical equipment to its now-minority interest in NBC Universal. GE fell out of favor during the financial crisis as its finance division suffered big losses that threatened the entire company.

Lately, though, GE has been firing on all cylinders. It’s working with a variety of partners on initiatives including health-care information technology sharing and LED production, and it also expects to expand its aviation business significantly this year. Yet with a share price of just $19, the stock has only about a 1% weighting in the Dow.

Intel (Nasdaq: INTC  )
This semiconductor giant has been successful for decades, riding on the surge in PC demand since the late 1980s. With in-house production facilities, Intel is insulated from third-party production problems that challenge some of its rivals.

With PCs giving way to mobile devices, Intel has had to answer a major threat. But with its Medfield mobile chip poised to find its way into tablets and smartphones later this year, Intel is positioning itself to join the mobile revolution. If it succeeds, then its roughly 1.5% weighting in the Dow won’t do the chip company justice.

Pfizer (NYSE: PFE  )
Pfizer has the largest market cap of any pure pharmaceutical company in the U.S., but by Dow standards, it gets almost no respect at all. It commands just a 1.25% weighting because of its share price around $21.50.

Like other pharma stocks, Pfizer is dealing with the setback of having lost patent protection on its blockbuster drug. But even with Lipitor open to generic competition, Pfizer has a reasonable pipeline of drugs to work on. Given the company’s huge size, Pfizer is in a much stronger position to bolster its future prospects than many of its peers.

Cisco (Nasdaq: CSCO  )
Cisco went through a rough patch a few years ago. Competitors seemed to gain the upper hand, and Cisco’s customer base of government agencies found itself facing big cash crunches that hamstrung IT spending. Moreover, the company made some mistakes with its failed foray into consumer electronics as it failed to defend its core business.

But more recently, Cisco has gotten its act together. With a narrowed focus that goes back to the company’s roots, Cisco’s share price has climbed steadily since the middle of 2011. But even with its gains, the stock makes up only about 1.2% of the Dow — less than a tenth of IBM‘s influence on the average.

Get built
The Dow is only as good as its component stocks, and sometimes, the Dow’s methodology obscures its best companies. Be sure to look beyond the Dow average itself to find its most promising stocks.

If the Dow is not enough for you, we have some more ideas for you to consider. The Motley Fool’s latest special report on retirement highlights three promising long-term stock picks from a variety of industries to give you the solid returns you need. But don’t wait; get your free report today while it’s still available.

For millions of people around the nation, the stock market is the Dow Jones Industrial Average (INDEX: ^DJI  ) . The 30 stocks that make up the Dow encompass nearly every industry in the market, going well beyond core namesake industrial stocks to include companies from sectors that no one would ever think of as “industrial.”

But if you settle for using the Dow, you’re not getting the complete picture of the stock market. Later in this article, I’ll show you the measure that gives you everything the Dow has to offer. But first, let’s look at why the Dow Industrials don’t quite get the job done.

Anatomy of an average
The Dow Industrial Average has evolved over the years. Early in its history, the 12 stocks that made up the average about 100 years ago included largely heavy-industrial companies. As the first member among the current Dow stocks to gain entry to the average, General Electric (NYSE: GE  ) was a fair representative of the dozen Dow stocks of the era — and for the most part, it still is, despite its recent foray into financial services and other non-industrial businesses.

As the average evolved, the Industrial Average in particular expanded in scope to become almost a microcosm of the overall market. Restaurants, financial institutions, and technology companies now play a huge role in the Dow Industrials.

But the Dow still has two glaring omissions: transportation stocks and utilities. Those groups have their own averages to represent them, but keeping them separate means that most investors simply ignore the Dow Transports and Dow Utilities entirely.

The forgotten Dow average
If you want everything the Dow averages have to offer, you have to go beyond the Industrials, Transports, and Utilities to a fourth, often neglected Dow average. The Dow Jones Composite (INDEX: ^DJA  ) includes all 65 stocks that appear in the other three averages.

The advantage that the Dow Composite has is that it doesn’t leave out any sector of the market. Given the importance of having a broad-based benchmark that reflects the movements in every part of the stock market, the Dow Composite does a better job of providing an all-inclusive snapshot of share prices.

The better Dow?
But the Dow Composite has its own quirks. Since it’s a simple average, it’s prone to the same price-weighting problems that the Dow Industrials has. And in fact, adding in the Dow Transports and Dow Utilities makes it worse.

Consider: If you add up the share prices of the Dow Industrials, you get a total value of about $1,700. The Transports add up to about $875, while the Utilities weigh in at about $550. Add that together and you get $3,125.

The bigger problem, though, is the relative weightings of those sectors. Even though the Industrials cover nearly all the sectors of the economy, they get just over half the weight of the Dow Composite, while the Transports get a disproportionately high weighting of more than 25%. And in particular, the individual stocks Union Pacific (NYSE: UNP  ) and FedEx (NYSE: FDX  ) together make up almost a quarter of the Transports’ contribution to the Dow Composite. Both companies are reasonable representatives for their respective industries, and they’ve both performed in line with the economic conditions that they face. But for them to have so much more weight than similar companies in their sector, as well as other sectors that happen to have only a few low-priced stocks in the average, just doesn’t make sense.

Good news coming?
Despite its shortcomings, the Dow Composite is confirming the multiyear highs we’ve seen in many other major market benchmarks. Unlike the Industrials, however, the Dow Composite is somewhat closer to its all-time highs from back in 2007. That’s due largely to the transportation sector’s contribution to the Composite — but if the Dow Composite can set new record highs, it could be the first sign of a renewed bull market that could take stocks much higher.

Get it all
The Dow is a fine place to start looking for good investment ideas, but it shouldn’t be the place you end your search as well. The Motley Fool’s latest special report on retirement highlights three promising long-term stock picks from a variety of industries to give you the solid returns you need. But don’t wait; get your free report today while it’s still available.

Good news seemed to be everywhere, with Greek optimism over an accord to reduce the amount outstanding on its sovereign debt combining with a strong U.S. jobs report to generate optimism. Closing the week, the Dow Jones Industrials (INDEX: ^DJI  ) rose modestly, finishing up 14 points, to 12,922. The S&P 500 (INDEX: ^GSPC  ) climbed 5 points to finish at 1,371.

Still, not every stock joined the party. Here are three that posted some substantial losses on the day.

Hewlett-Packard (NYSE: HPQ  ) , down 1.9%
HP has a daunting task ahead of it: not just to define what it wants its new role in the technology industry to be, but also to make it actually happen. Today, a report from the New York Times revealed one part of HP’s strategic plan — building up its cloud-computing services.

With Amazon.com already delivering cloud services, HP certainly doesn’t have free rein to take over the industry. But with an emphasis on higher-value premium tools and applications over simply commoditized offerings, HP hopes to make the business less about competing on cost — where it would likely lose to Amazon — and more about providing a full-service experience.

If that works, then it could be one key to HP’s recovery. But based on investor reaction, HP faces a lot of skepticism.

Boeing (NYSE: BA  ) , down 1.1%
Boeing has a lot going on today. On one hand, the aerospace giant is competing well against Europe’s Airbus, with a huge edge in orders so far this year. Moreover, airline United Continental said that it managed to finance its order for Boeing 787 Dreamliners through the bond market, marking the first time an airline has sold bonds to fund a Dreamliner purchase.

But, according to Reuters, the World Trade Organization said that Boeing has benefited from billions of dollars in unfair subsidies. The ruling would rekindle a long dispute between Boeing and Airbus, both of which have had to defend against allegations of subsidies. The U.S. has pushed for sanctions of $7 billion to $10 billion against the European Union for its alleged aid to Airbus. If the WTO’s formal report due later this month confirms the Reuters report, then Boeing could face a long, drawn-out process that could distract from its core mission of getting its big backlog of orders filled.

ExxonMobil (NYSE: XOM  ) , down 0.6%
The tug of war between Big Oil and the government continues. Today, Exxon CEO Rex Tillerson said that although it needs government to help it develop many sources of energy, the best way the government can help companies innovate is by supporting research rather than using taxes and subsidies to cherry-pick certain portions of the industry.

Despite today’s small drop, if energy demand continues rising — and, with signs of economic strength, that seems likely — then Exxon should be poised to do well for the foreseeable future. Even with a possible short-term production slowdown, the long-term prospects for Exxon seem better than ever.

Keep soaring
Don’t worry about it if your stock is losing on a decent day. It’s what happens over years that matters. The Motley Fool’s latest special report on retirement highlights three promising long-term stock picks for a more secure financial future. But don’t wait — get your free report today, while it’s still available.

Well, any thoughts that we’d make it through 2012 without a big down day got quashed today, as the stock market finally posted a major decline. The Dow Jones Industrials (INDEX: ^DJI  ) closed down 204 points, to 12,759, its first triple-digit loss of the year. The S&P 500 (INDEX: ^GSPC  ) also dropped sharply, falling 21 points, to 1,343, for its biggest single-session loss of the year.

I could find three Dow stocks that rose today, but some stocks held up a lot better than others. Let’s take a closer look at three of the better-performing stocks in the Dow today.

Intel (Nasdaq: INTC  ) , up 0.2%
Most people don’t see technology stocks as being particularly defensive. But good news can push a stock up, and that may be what helped Intel end up as the Dow’s single gainer today, with a small rise.

Intel released the latest version of its Xeon chip for servers today. The server chip is aimed squarely at the cloud-computing market, with better performance and greater energy efficiency than its previous offerings. With server manufacturers expected to get onboard with server platforms using the chips, the move should bolster Intel’s strength in the server-chip market against its rivals.

McDonald’s (NYSE: MCD  ) , down 0.1%
Big stock drops don’t scare McDonald’s investors. In case you don’t remember, the fast-food giant was one of the few stocks that managed to post a gain in the bear market year of 2008, when the S&P fell 37%.

Of course, with a big part of McDonald’s growth prospects coming from China, news of a potential slowdown in the economy of the world’s most-populous nation could have an impact on the company going forward. But if China follows through with plans to focus on developing a stronger internal consumer base for its economy, then the move could actually help McDonald’s — by giving it a better-developed market to serve.

Procter & Gamble (NYSE: PG  ) , down 0.2%
It’s not uncommon to find companies in defensive industries like consumer staples among top performers in down markets. P&G certainly meets the definition, with its strong stable of high-value brands commanding a presence in millions of households.

Today, the company once again was named as one of the most-admired businesses in the world, by Fortune magazine. Although P&G dropped from No. 5 last year to No. 9 this year, its ability to adapt to challenging markets and deal with the need to cut costs gave it the top rank in its industry.

Make the best of a bad lot
Great stocks hold up well even on down days. Find out about the one stock the Fool’s chief investment officer picked to crush the market in this free report: “The Motley Fool’s Top Stock for 2012.” Instant access is just a click away.

After plunging 0.7% at first, The Dow Jones Industrial Average (INDEX: ^DJI  ) rallied to limit its losses for the day to 0.1%. But a few stocks fared much worse. These were the three biggest losers:

After suffering through last week’s announcement of disappointing manufacturing data, manufacturing and economically sensitive stocks took the plunge again today.

What’s the occasion? In his state of the nation address, Chinese Premier Wen Jiabo targeted a goal of 7.5% GDP growth in 2012. That doesn’t mean growth will necessarily come crashing down to that precise rate, as China does tend to overshoot its growth targets, but lowering the outlook from 8% is bound to raise a few eyebrows. Caterpillar generates a quarter of its revenue from the Asia/Pacific region, and the company has made Chinese expansion a core part of its growth strategy. Alcoa has fewer direct sales to China, but a slowdown in infrastructure-hungry emerging economies is hardly the sort of thing materials producers want to see.

As I’ve been saying lately, with energy prices up on geopolitical concerns, it’s easy to see how we could experience a bit of rockiness in construction, materials, and manufacturing in the coming weeks. Slightly slower growth out of China isn’t a disaster. But with the U.S. engaged in a tentative recovery and Europe desperately trying to avoid implosion, our interconnected global economy really doesn’t need a major emerging-market slowdown.

Bank of America was down today after strong employment reports helped it post the second highest gains among all Dow stocks for last week. In addition to today’s dour economic tidbit, Wall Street is lobbying the Federal Reserve to withhold certain details from its most recently conducted stress tests from the public that bailed it out. Analysts are also beginning to question their (let’s face it) absurdly optimistic assumptions for BofA’s earnings this year. BofA’s Dow peer JPMorgan Chase (NYSE: JPM  ) , which also has considerable international operations and was a part of the lobbying effort, was down 0.6%.

So what do we make out of this? Three things: The near-term manufacturing/emerging-market/energy-inflation story is still in force. Major Wall Street banks may not be in as tip-top shape prudential shape as the market sometimes pretends they are.

And finally, although Alcoa, Caterpillar, and Bank of America all lost to the market today, it’s important to remember that what happens to the market on a day-to-day or even week-to-week basis doesn’t matter nearly as much as how our stocks perform over the long run. If you’re interested in one stock that our chief investment officer picked to crush the market, check out our brand-new report, “The Motley Fool’s Top Stock for 2012.” It highlights a company that is revolutionizing commerce in Latin America. For a limited time, you can get instant access to the name of this company for free.