The Dow Jones Industrial Average (^DJI) began 2022 flying high. The blue chip index reached its all-time closing zenith at 36,799.65 points on Jan. 4, 2022. But from there, the rest of the year was rocky.
Volatility shook stock values all year long, as investors were spooked by fallout from Russia's invasion of Ukraine, rising inflation and interest rate hikes.
These five companies, all listed in the Dow, took the brunt of the fallout, landing themselves in the bottom of the year's 30 blue chip performers. We explain more about which ones they are and how they found themselves in this list.
3M Company
A huge decline in 3M Company's (MMM) stock from Jan. 3 saw its price fall from $177.74 on Jan. 3 to just over $120 on the last trading day before Christmas. So what accounted for the multinational conglomerate's industry, worker safety, health care and consumer goods company? The stock, after a July boost from announced plans to spin off its health care operations to a separate entity, encountered litigation risks. These were attributed to lawsuits about faulty earplugs causing hearing problems. A move to file for bankruptcy for Aearo Technologies, an acquisition the company made in 2008, managed to anger veterans. The stock continues to be popular because of its dividend history, and will be one to watch in 2023.
NIKE
Nike (NKE) came back down to earth in 2022.
While the company's stock was one of the pandemic's darlings, shares have dropped nearly 35% (as of December 15).
The culprit: a retail environment that has seen slowing demand amid inflationary pressure and the looming threat of a recession.
One of the steepest drops came in late September after the company issued a profit warning, cautioning that "higher markdowns" will be needed to reduce its global inventory.
"There are record high levels of inventory across the sector with demand slowing. Nike's 150 [basis points] increase in markdown pressure one quarter into the company's calendar [fiscal year] is indicative of a fragile environment," Cowen's John Kernan said, Retail Dive reported.
Barclays also cut the company's stock to equal weight while lowering its price target to $110 from $125.
"We are more interested in current and forward-looking demand trends and future margin risk," than first quarter earnings, said Barclays analyst Adrienne Yih.
Salesforce Inc.
Salesforce (CRM), the cloud-based software company in San Francisco that deals in customer relationship management, was founded by former Oracle (ORCL) executive Marc Benioff.
Its stock price is off about 50% since its Jan. 3 value of $255.46. The company, having announced its acquisition of instant messaging program Slack in July 2021, has suffered a tailspin in 2022.
The stock's lackluster performance has been attributed to broad macroeconomic pressures and cyclical forces, including rising interest rates and fears of recession.
A management shakeup recently has caused concerns. On Dec. 1, Bret Taylor announced he will depart on Jan. 31, leaving Benioff is its single CEO.
Still, many analysts think the stock is a buying opportunity.
Intel Corporation
Intel (INTC), the world's largest semiconductor chip manufacturer by revenue, began the year with a stock price of $53.41. By late December, it has lost about half its value.
Market headwinds are largely to blame for its decline. A disappointing second-quarter earnings report accelerated investor worries throughout the year. The company has also fallen behind in the innovation race with competitors like AMD and Nvidia.
The stock, while never reaching its tech bubble high way back in 2000, has been the topic of much discussion in 2022.
The company's foray into graphics processing units (GPUs) is generally thought to have been mediocre.
Walt Disney Company
Walt Disney (DIS) faced a perfect storm of bad sentiment in 2022 even while it delivered fairly stellar results. The Mouse House grew the Disney+ streaming service faster than expected, but Wall Street punished the company’s stock for the cost of doing that. Even though former Disney CEO Bob Chapek had laid out the roadmap for the ramping up of the service, which showed expenses starting to drop.
Add in that Disney has to navigate an uncertain market for theatrical films and concerns about how a potential recession will impact discretionary spending and the company’s stock was dragged down even though its actual results were strong.
Disney's former CEO Bob Iger returned late this year after Chapek, Iger's anointed successor, was abruptly forced out by the board.
In reality. Disney has proven recession resistant and you could argue that rich people will still visit Disney World and Disneyland while economically challenged people might be drawn to Disney+ given the value it offers for the price you pay.
Disney has weathered the pandemic and come out of it stronger, but its stock price has not reflected that reality.
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