Although stocks got off to a slow start on Monday, spooked by a disappointing pace of new home sales for November, the bulls finally trickled in and pushed the broad market up by an average of about 0.4%. The S&P 500’s close of 2078.55, in fact, was a record high close.
Not every stock was enjoying the bullish tide, however. Gilead Sciences, Inc. (GILD), Ocwen Financial Corp. (OCN) and United States Steel Corporation (X) lost more than their fair share of ground today.
Gilead Sciences (GILD)
Gilead Sciences is out, AbbVie Inc. (ABBV) is in, and anyone who was holding GILD stock as of this morning paid the price for it. Gilead Sciences closed down 14% for the day.
The prompt for the drubbing was news that benefits manager Express Scripts decided that, as of January 1, it would only offer a hepatitis C drug from AbbVie to its 25 million customers, leaving Gilead Sciences’ competing drugs Sovaldi and Harvoni off of the Express Scripts menu of Hep-C drugs it would make available to its plans’ participants.
It remains to be seen to what extent this decision will have on Gilead Science’s bottom line, but clearly investors aren’t very optimistic.
United States Steel (X)
Just when it looks like things can’t get any worse for United States Steel, they get worse. Already down 35% since peaking at $46.55 in September, X stock fell nearly another 9% today in the heels of news that South Korea had lodged a formal complaint to the World Trade Organization regarding U.S tariffs on imports of South Korean steel goods.
United States put the tariffs in place in July, arguing the country’s steel goods were priced at artificially low levels and were hurting U.S. suppliers. Russia has since made a similar claim, as the United States also recently unwound a long-standing steel-scrap deal with that could put even further pressure on the struggling country. But the complaint(s) — and the implosion of X stock, for that matter — may have been ultimately prompted by the fact that steel prices have plunged to multi-month lows as of last week.
Regardless of the true reason, the strong selling of United States Steel shares and accompanying bets against it have made X stock a highly-shorted name. In fact, the stock’s short interest now stands at a hefty 26.1%.
Ocwen Financial (OCN)
Ocwen Financial took an outright beating on Monday, fueled by an unsurprisingly-costly legal settlement and the subsequent announcement that its executive chairman would be stepping down.
Mortgage loan servicer Ocwen Financial agreed to pay $150 million to the New York State Department of Financial Services after the regulator found the company had improperly accelerated foreclosures for many of its borrowers. The DFS investigation also determined that Ocwen Financial had never established adequate oversight of operations, and would be forced to do so now. For perspective, Ocwen drove a little more than $2 billion in revenue last year, and turned $298 million of it into a profit.
OCN stock tumbled a stunning 27% in the wake of the news.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
