Between a 20% plunge China’s imports in January, ongoing worries about Greece, and an OPEC outlook for projecting a prolonged oil supply glut despite expectations of reduced U.S. output, investors had plenty of reason to not want stocks on Monday. The S&P 500 dropped lower to the tune of 0.42% to a close of 2046.74.
Such a selloff would have been a relative victory for Century Aluminum Co. (NASDAQ:CENX), PVH Corp. (NYSE:PVH) and United Continental Holdings Inc. (NYSE:UAL), though, each of which lost much, much more.
PVH Corp. (PVH)
In retrospect, perhaps the best thing Jim Cramer could have said about apparel maker PVH Corp. this morning was nothing at all. His comments simply drew attention to the fact that JPMorgan Chase & Co. not only downgraded PVH stock and lowered its price target on it, but also significantly dialed back its earnings expectations for PVH Corp. in 2015.
The specifics: JPMorgan now expects PVH Corp. to earn $7.08 per share of PVH stock, versus average expectations of $8.03. For 2016, JPMorgan believes the company will earn $7.71 per share, well short of average expectations of $9.16. JPMorgan also lowered its price target on PVH stock, from $135 to $93.
PVH stock closed 5% lower today.
United Continental Holdings (UAL)
For the third day in a row, United Continental Holdings shares fell sharply on the heels of rising oil prices. American Airlines Group Inc. (NASDAQ:AAL) wasn’t far behind, for the same reason … the threat of rising jet fuel prices.
All told, UAL stock fell more than 4% on Monday, bringing the total three-day rout to nearly 10%, and to a whopping 12.2% since peaking in late January. The move correlates with a 20% gain in crude oil prices; the commodity has risen from a close of $44.53 per barrel on January 29th to today’s close near $53.70.
Crude prices were spurred higher by an OPEC-produced oil outlook calling for greater demand this year, which would theoretically put upward pressure on oil prices.
Century Aluminum (CENX)
Century Aluminum didn’t do anything wrong to deserve its 9% beat-down on Monday. It’s just that CENX and bigger brother in the aluminum industry Alcoa Inc. (NYSE:AA) were caught in the wrong place at the wrong time: the receiving end of an industry-wide downgrade from JPMorgan Chase & Co.
Specifically, the investment bank’s analytical arm cited “deteriorating aluminum fundamentals” as the reason for downgrading CENX stock from an overweight to only a “neutral” rating. The price target for CENX stock was also lowered, from $20.00 per share to $17.50.
AA stock also fell on the dire outlook, though not as harshly. Alcoa shares closed a little more than 5% lower on Monday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
