Wednesday may have been a win for the market, but it was hardly a decisive win. Unsure of what to think of the 201,000 new jobs ADP says the country created last month, traders only pushed the S&P 500 up 0.21% to a close of 2,114.07. The index gave up more of its intraday gain than it managed to hang onto.
Not every stock got a reprieve on Wednesday, however. Williams Companies Inc. (NYSE:WMB), Newmont Mining Corp. (NYSE:NEM) and Dean Foods Co. (NYSE:DF) were among the ones that didn’t escape the bears’ grip. However, two of the three were simply victims of being part of the wrong industry.
Williams Companies (WMB)
Don’t look too hard for a company-specific reason Williams Companies were in the hole 2.6% on Wednesday — you won’t find one. The culprit was a steep decline in the price of oil, which pulled all energy stocks lower.
When all was said and done, crude oil lost 2.5% of its value today, with near-term futures contracts ending the trading session at a price of $59.70 per barrel. Although all oil stocks fell on the news, WMB was hit harder than most, and sold off on higher volume than most of its peers.
The energy sector as a whole closed about 0.3% lower on Wednesday … one of the few arenas to finish the day in the red.
Newmont Mining (NEM)
Gold miner Newmont Mining gave up 2% of its value during Wednesday’s trading. Newmont Mining did nothing wrong, but the pullback in gold prices sent NEM lower anyway.
The 0.8% tumble from gold prices, to a value of $1185.30 per ounce, seems minor compared to some of the big losses NM and other gold mining stocks suffered today. Investors should bear in mind, though, that gold mining stocks tend to magnify the ebb and flow in the price of the commodity in question. The cost of mining an ounce of gold is relatively static. Ergo, any change in the price of gold alters the profitability of gold-mining on an almost dollar-for-dollar basis.
In other words, a modest rise in the price of gold will be exceedingly bullish for NM.
Dean Foods (DF)
Last but not least, Dean Foods can’t chalk up today’s 4% loss to simply being in the wrong sector at the wrong time. DF took a hit because it was downgraded.
Morgan Stanley did the deed, lowering its opinion on Dean Foods from “overweight” to “equal-weight”, saying DF was only worth $19 per share.
Morgan Stanley analyst Matthew Grainger opined:
“While we are constructive on DF’s near-term outlook given a benign input cost environment, we view this as appropriately reflected in valuation, and see continued pressures for the fluid milk industry.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
