The bulls fought back valiantly in the second half of Wednesday’s trading session, but it wasn’t enough to get the market back into the black for the day after the plunge at the open. A 0.1% decline in December’s retail spending scared investors early on in the session, and nothing could alleviate their new worries.
All told, the S&P 500 fell 0.6% today.
Tesla Motors Inc. (TSLA), Century Aluminum Co. (CENX) and Foot Locker, Inc. (FL) contributed more than their fair share to the marketwide selling effort. Here’s what spurred serious weakness for each.
Tesla Motors (TSLA)
Any Tesla Motors shareholder expecting the company to turn a profit anytime soon may not want to hold their breath — it’s going to be years before it happens.
Specifically, it’s likely to be about five years before the electric car manufacturer drives reliable positive income.
That’s the word from CEO Elon Musk anyway, who offered the concerning news on Tuesday while speaking at the Automotive News World Congress. Mass production of the lower-cost Model S would create the needed critical mass to get Tesla into the black, but that’s going to require the right infrastructure for consumers as well as greater production capacity than the company currently has.
TSLA stock fell nearly 6% on Musk’s comments.
Century Aluminum (CENX)
Not that CENX isn’t facing its own problems, but a big piece of the reason Century Aluminum shares slumped 8% today stems from the fact that industry big-brother Alcoa Inc. (AA) fell more than 6%. The Alcoa tumble on Wednesday was just an extension of Tuesday’s strong dip after the company unveiled last quarter’s earnings. Though earnings came in better than estimates and revenue grew 14% thanks to firm aluminum prices, AA stock has fallen nearly 8% since Monday’s pre-earnings close.
Neither stock has been helped by falling aluminum prices either, which, after briefly perking up last week, resumed their downtrend this week. A move back to multi-year lows is in sight, which bodes poorly for all aluminum stocks.
Foot Locker (FL)
Foot Locker shares fell to new multi-month lows on Wednesday, closing 4% lower following a downgrade from Goldman Sachs. Goldman’s analyst lowered the price target on FL stock from $55 to $47 per share, and lowered the rating from “neutral” to “sell.”
One of the chief concerns expressed by Goldman Sachs was the likelihood of narrowing margins from the critical basketball shoe segment. It’s a legitimate concern too: Finish Line (FINL) voiced similar pricing concerns last month, prompting the company to lower its guidance.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
