Despite the strong start for stocks following a surprisingly strong Chicago PMI reading for July posted this morning, the market managed to find its way into negative territory on the last trading day of the week. The S&P 500’s close of 2,103.92 was 0.22% lower than Thursday’s finish, led mostly by declining stocks in the energy sector.
In fact, Chevron Corporation (NYSE:CVX) was one of the market’s very biggest large caps losers on Friday. LinkedIn Corp (NYSE:LNKD) and Hanesbrands Inc. (NYSE:HBI) were two of the only names that managed to dole out a performance that was even worse than the one dished out by CVX.
LinkedIn (LNKD)
Professional networking website LinkedIn saw its shares plunge more than 10% on Friday in the wake of Thursday’s evening’s release of its second-quarter numbers. Overall they were fine … even good, relative to estimates. The company earned 55 cents per share on $711.7 million in revenue, versus expectations for a profit of 30 cents per share of LNKD, and sales of only $680 million.
LNKD shareholders, however, had a tough time digesting anemic membership growth and plummeting display ad revenue. The former only grew 3% greater than Q1’s total, to 380 million, while the latter fell 30% on a year-over-year basis.
The market is increasingly concerned that the revitalization effort — and the big spending that’s making it happen — won’t pay off.
Hanesbrands (HBI)
LNKD wasn’t the only stock to get hit hard by disappointing results and guidance on Friday. Shares of apparel name Hanesbrands fell 9% in the wake of similarly disappointing second-quarter numbers.
Earnings-wise, Hanesbrands did fine. Operating income of 50 cents per share of HBI was right on analysts’ target. The top line of $1.52 billion was also 13% better than the year-ago figure, but missed expectations of $1.57 billion.
The prompt for the 9% selloff from HBI, however, was mostly its outlook. Now the company expects full-year revenue of just below $5.9 billion, versus previous guidance of between $5.9 billion and $5.95 billion. Analysts had been modeling $5.96 billion. As for earnings, Hanesbrands maintains it will earn between $1.61 and $1.66 per share of HBI this year, versus analyst estimates of $1.65 per share.
Chevron (CVX)
Chevron was hardly the only oil stock to dip deep into the red ink on Friday. But it lost the most ground among the majors, with CVX shares closing down nearly 5%.
The headwind CVX hit was two-fold. Crude oil itself tumbled more than 3% today to close near $47 per barrel. But, along with news that it booked its weakest quarterly profit in more than 12 years in Q2 of this year (down 90% on a year-over-year basis), Chevron offered what could only be perceived as an alarming outlook for oil prices. An economic slowdown in China along with sustained strong output from the United States were cited as a couple of reasons for the discouraging outlook.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
