Stock market bounces back after dramatic weekby Annie Baxter, Minnesota Public Radio
The stock market recuperated some of its losses Friday following a dramatic week of sell-offs. The Dow Jones industrial average ended the day up 61 points, or 0.5 percent. Stocks of many major Minnesota companies also saw some improvements over Thursday's steep decline.
That was true at companies including, but not limited to, 3M, the Mosaic Company, Target, Best Buy, Hutchinson Technology, General Mills, Medtronic, UnitedHealth, and St. Jude Medical.
Most of those stocks finished down for the week. Shares of fertilizer maker Mosaic were down 10 percent since Monday. General Mills dropped about 1.6 percent over that same period.
The stock price of Ameriprise Financial and U.S. Bank continued to slide on Friday.
"Given what we just went through in 2008 with the financial industry and banks and the industry itself almost completely going out of business, everyone is acutely sensitive to the financial sector. And when they're concerned about the market, they're concerned about those stocks," said portfolio manager David Heupel at Thrivent Financial.
On the whole, Heupel said there is little correlation between the stock price declines this week and individual companies' performance. He notes that 3M recently reported strong earnings but still saw its stock price drop off. 3M's stock fell about 4.6 percent since Monday.
And a drop in stock price doesn't mean companies have less money to play around with.
"Your stock price doesn't impact your balance sheet. If you have cash, you have cash. Your company's market value declined as the stock declined, but your balance sheet is as strong as it was," Heupel said. "And I think some companies will be opportunistic and invest some of that cash in their own stock when they feel it's depressed."
It is possible that the big stock market correction this week will make companies assess how their business is performing, analysts said.
"The big sell-off is driven by multiple issues, one of which is concerns of slower economic growth," said Jeff Windau, a research analyst for Edward Jones. "From the company perspective, it does start to matter what they're going to be spending on and how they're going to be looking at growth programs going forward."
Windau notes that the sell-off this week could prompt investors to ask more questions about a company's expenditures on capital projects or whether they're cutting costs.
However, one potential benefit of the big correction, according to Heupel, is that big companies might be able to snap up smaller ones for less than they thought they would have to pay.
- All Things Considered, 08/05/2011, 5:20 p.m.