Between more misery for Chinese stocks and the NYSE’s halted trading, it would have been easy to forget today was also the day the Federal Reserve released the minutes from its June meeting.
On the other hand, it didn’t really matter. While the Fed’s members are clearly concerned about Greece and the jobs market, as of the time of their last pow-wow, they still collectively saw an environment that merited a start to rising interest rates sometime this year.
Investors, who also watched China’s market implode as Greece toyed with the idea of abandoning the euro and job growth slowed, weren’t happy with the Fed’s take on things as of the middle of last month. When all was said and done, the S&P 500’s close of 2,046.69 was 1.66% lower than Tuesday’s close and carried the index below some critical technical floors.
It was even worse for MGM Resorts International (NYSE:MGM), Alcoa Inc. (NYSE:AA) and General Motors Company (NYSE:GM). Here’s a closer look at today’s worst stocks.
MGM Resorts (MGM)
Don’t look for a specific reason MGM Resorts shares fell almost 8% today. You won’t find any news. Rather, blame Macau, and more than that, blame China. Anything linked to China in any way is seen as a liability now that Chinese stocks are in a freefall. The Shanghai Composite Index fell another 6% today, extending the three-week rout to more than a 30% loss.
The link MGM Resorts has to China is, of course, exposure to its gambling enclave, Macau.
Alcoa (AA)
Not that Alcoa shares haven’t been in a downtrend since February, but given how the bleeding stopped for AA earlier this week, it appeared the market was betting this evening’s earnings report would say the worst-case scenario has already been priced in.
The market had good reason to change its mind today, however, after BMO posted a pessimistic report.
BMO analyst David Gagliano noted that we’re looking at…
“The beginning of one of the weakest pricing environments in years for Alcoa. ‘The beginning’ because of the lags associated with LME aluminum, regional premiums, and alumina prices, which suggests the continued sharp decline in each during the past one to three months will adversely impact 2Q and 3Q results.”
At least part of these numbers will be revealed by the time this commentary is posted.
Alcoa is expected to report a profit of 23 cents per share for the prior quarter when it posts results after the close today, and the company is expected to earn 20 cents per share of AA for the next quarter. Gagliano fears the actual figure for Q2 and forecast figure for Q3 could roll in worse than anticipated, which drove AA lower to the tune of 5% on Wednesday.
General Motors (GM)
News-wise, it has been a rough week for General Motors. We learned on Monday that the company’s growth in China is hitting a headwind, which could get worse if China’s market doesn’t recover soon. Then on Tuesday we learned the death toll stemming from GM vehicle defects was reaching even higher levels.
It looks like a commentary posted today, however, finally tipped the scaled decidedly against GM. That commentary was research from analytics outfit Market Realist explaining to what extent a sustained strong U.S. dollar could have crimped earnings from GM as well as from Ford Motor Company (NYSE:F) during the second quarter.
Faced with one too many stark realities, GM shareholders sent the stock down more than 5% on Wednesday, to new multi-week lows near $31.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
