While the Federal Reserve’s policymakers didn’t see eye-to-eye on the exact timing of what will likely be a series of interest rate hikes, there’s no denying they almost all agreed it needed to happen sooner than later … as in before the end of the year.
Stocks, for the most part, took the news in stride though, with the S&P 500 eking out a small 0.27% gain for the session, closing near where it opened for the session.
Not every stock breezed through Wednesday’s trading, however. Cummins Inc. (NYSE:CMI), Lions Gate Entertainment Corp. (NYSE:LGF) and AT&T Inc. (NYSE:T) all suffered noteworthy setbacks. Here’s why.
Lions Gate Entertainment (LGF)
A quick tip for Lions Gate Entertainment … in the future, if at all possible, it may be best to not announce a secondary offering at the same time a revenue outlook is reeled in. Investors can digest one or the other separately, but hearing both at the same time can be tough on a stock.
The bad news: Lions Gate Entertainment will be selling 10 million shares of LGF currently held by MHR Fund Management, which happens to be the largest shareholder. The worse news: Lions Gate reported on Tuesday that its three-year revenue forecast between $1.2 billion and $1.3 billion was now leaning toward the lower end of that range.
While the studio has until March of 2017 to improve its top line picture, after a lackluster box office take with the most recent Hunger Games film, LGF investors may be worried the company simply has more time to come up even shorter of its long-term goal.
All told, LGF shares fell nearly 7% today.
Cummins (CMI)
Already in a concerning downtrend due to performance worries, the bears poured salt in the wounds today, sending Cummins shares more than a full percentage point lower to bring the year-to-date loss for CMI to nearly 8%.
Wednesday’s bearish prod was a downgrade of CMI stock by Goldman Sachs. Analyst Jerry Revich lowered his opinion on Cummins from a “buy” to a “neutral” stance, maintaining his price target of $155 per share.
Revich’s concern was two-fold. Not only does he see lethargic overseas demand, he also feels the growth cycle that spurred solid U.S. demand over the past couple of years has pretty much played out.
AT&T (T)
As if AT&T needed any more financial headaches in its life, it got another one today, and T stock rekindled its downtrend as a result.
While AT&T is likely to win the price war that smaller competitors Sprint Corp. (NYSE:S) and T-Mobile US Inc. (NYSE:TMUS) are waging against it simply because it has the size and cash it needs to withstand, it hasn’t been an easy war to wage. That’s largely why T stock has been struggling since November of late last year, with no end to the weakness in sight.
Still struggling to shoulder that weight, T shares were dealt another blow today, being fined $25 million by the FCC due to breaches of 280,000 customers’ digital data.
The 1.5% pullback from AT&T may seem minor, and it is. But, considering the stock is close to new 52-week lows and is now right back where it was priced in mid-2012, T shareholders are growing understandably frustrated.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
