Dow Dumps While Boeing Stock Plunges to Staggering $28 Billion Loss
The Dow lagged behind the broader U.S. stock market Friday as Boeing Co (BA) headed for its ninth drop in ten days in the wake of the Ethiopian Airline crash that killed 157 people last weekend. An investigation into the wreckage suggests that the doomed flight was configured to dive based on an analysis of a screw-like device that controls the plane’s nose.
Dow Makes Sharp Reversal after Early Gains
The Dow Jones Industrial Average opened slightly higher on Friday, reflecting a solid pre-market session for Dow futures. However, the rally would soon fizzle, with the index falling as much as 60 points. At last check, the blue-chip index was down 47 points, or 0.2%, at 25,662.93.
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Dow Jones Industrial Average can’t keep up with its peers Friday as Boeing continues to weigh down the index. | Source: Yahoo Finance.
The broad S&P 500 Index of large-cap stocks rose 0.2% to 2,814.03. Gains were primarily concentrated in technology. The sector rose 1.1% through the mid-morning with shares of semiconductor companies surging 3.6%. Consumer staples also outperformed the benchmark, gaining 0.3%. Financials and materials also traded higher.
On the opposite side of the ledger, industrials stocks declined 0.5% on average. Communication services declined by a similar margin.
Surging tech shares propelled the Nasdaq Composite Index to a gain of 0.6%. The tech-focused average last traded at 7,675.36.
The CBOE Volatility Index, commonly known as the VIX, fell on Friday to its lowest level since early October. The so-called “fear index” bottomed at 12.53 on a scale of 1-100 where 20-25 represents the historic average. It last traded at 13.02, where it was down 3.6%.
Boeing Sheds a Staggering $28 Billion
Boeing shares are in free-fall; the aerospace and defense contractor has lost $28 billion in market cap this week following the Ethiopian Airlines disaster on Sunday.| Source: Shutterstock
Shares of Boeing were down another 1.4% on Friday and were eyeing weekly losses of around 12%. That’s equivalent to roughly $28 billion in lost market share for the aerospace and defense contractor.
Bloomberg reported Friday that Ethiopian Airlines Flight 302 to Nairobi was configured to dive after investigators analyzed the plane’s jackscrew. The jackscrew is “used to set the trim that raises and lowers the plane’s nose.” This, combined with newly obtained satellite data, convinced the U.S. Federal Aviation Authority (FAA) to ground all Boeing 737 Max 8 airplanes. Boeing has since paused deliveries of its flagship aircraft.
In October, a similar Boeing 737 vessel crashed in the Java Sea off Indonesia, killing 189 people. At the time, the plane was said to have suffered unreliable sensor information as it plunged from the sky.
As CCN reported earlier this week, Boeing has delivered 350 MAX 8 jets as of January and has an additional 5,000 on back order.
Prior to the selloff, Boeing had driven roughly 30% of the Dow’s rally this year. The aerospace giant has the heaviest weighing in the Dow 30 index.