Despite its summer nosedive, the Dow Jones industrial average headed into September in positive territory for the year ? up slightly at 0.3 percent. That should be welcome news to those who saw the value of their portfolios plummet over a recent three-week period. The Dow plunged 16 percent from July 21 to Aug. 10, as did the broader Standard & Poor’s 500 index.
The Dow remains 9 percent off its high for the year in April. That’s when a two-year rally ran into resistance, and stocks then tumbled this summer over concerns about a possible default by the U.S. government as a result of failing to raise the debt ceiling. On the whole, the stock market has yet to fully recover. The S&P 500 is down 3.1 percent so far this year.
Although momentum is moving in the right direction again, 19 of the 30 stocks that make up the Dow are down for 2011. The top three losers are Bank of America, down 38.8 percent; Hewlett-Packard, -38.2 percent; and Cisco Systems Inc., -22.5 percent. The biggest winners are McDonald’s Corp., up 17.8 percent; IBM Corp., 17.1 percent; and American Express Co., 15.8 percent.
The Dow’s direction for the rest of the year will likely hinge on the jobs outlook and progress by the congressional supercommittee charged with finding $1.5 trillion in budget cuts to help reduce the deficit. Last year stocks shrugged off a summer slump and roared back on an eight-month rally. But concerns about debt and slow growth make a repeat unlikely.