The Dow Jones Industrial Average (DJINDICES: ^DJI ) may be having a record-setting week, but don't tell Boeing (NYSE: BA ) shareholders that. The aerospace stock has soured today despite the markets' upward momentum, and Boeing's new 787 Dreamliner is to blame once again. The Dow itself hasn't had too bad of a day, down a moderate 36 points as of 2:25 p.m. EDT, and the blue-chip index's stocks are split fairly evenly between winners and losers. Let's check out the big stories as the markets' week comes to a close.
Boeing in a bind
Just when everyone thought the Dreamliner's problems were over, a new PR headache has arisen for Boeing. An Ethiopian Airlines 787 caught fire at London's Heathrow Airport earlier today, less than two months after the FAA lifted the grounding order on Boeing's newest line of aircraft. The incident brings to mind the battery problems that occurred in January and got the 787 grounded in the first place.
Boeing has issued a notice that it is "aware" of the problem but has yet to release details on what caused the fire. If it's the battery again, it's a troubling incident for the 787 so soon after the company and regulators signaled that the Dreamliner was ready to take to the skies. Investors haven't taken kindly to the report: Boeing's stock has dived more than 4% on the day, having lost more than 6% earlier in the trading session.
Boeing has recovered well from the 787 grounding, and shares have bounced back in recent months. If today's incident is nothing more than an isolated fire, the stock offers plenty of reasons for optimism. The company boasts a giant backlog of planes and has sold 787 orders consistently in the aftermath of the grounding, having picked up more than 100 offers for its new 787-10 model at the Paris Airshow last month alone. However, shareholders need to watch this Heathrow incident carefully. If Boeing's battery problem is rearing its head again, the PR nightmare that many thought was over could come roaring back.
Elsewhere on the Dow, Verizon (NYSE: VZ ) shares have slumped by 1.5%. America's leading wireless company needs to sell more than $23 billion worth of Apple's (NASDAQ: AAPL ) iPhones this year in order to break even with its contract demands with the tech company -- and with iPhone demand slowing, analysts have cautioned that Verizon could be on the hook for billions of dollars at the end of the year.
Nomura Holdings analyst Stuart Jeffrey has reasoned that Verizon could owe $12 billion if Apple enforces its contract terms with the company, and while the tech firm could allow its partner a pass, analysts have warned that allowing Verizon to skirt its bill could tempt other carriers to ignore sales commitments as well. It's a tough situation both for Apple, which faces risking its relationship with Verizon, and for the wireless carrier itself, which might be forced to pay back a huge commitment if Apple takes a hard line about the unsold stock.
Finally, Bank of America shares have shot up 1.9% despite the company's ongoing court battle regarding accusations that it delayed or "misplaced" mortgage modifications for at-risk homeowners. B of A has accused its former mortgage workers of "impossible" claims regarding the firm's work with the federal Home Affordable Modification Program, but a Colorado lawsuit recently took things a step further by accusing the bank of racketeering violations under the government's RICO Act. Shots are being fired by both sides in a battle that won't end for a while, but for shareholders, this fight is key indicator for B of A's future as the company tries to escape its troubled recent history.
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