Investors finally got a reprieve on Tuesday after five days of strong selling. The S&P 500 bounced 1.24% to finish the session at 2,093.25. Yet, there’s no assurance Tuesday’s bullishness will be extended to any meaningful degree.
We also learned today that, this month, consumer confidence tumbled the most it has fallen in four years. That is, the Conference Board’s consumer confidence reading fell from June’s reading of 99.8 to 90.9 for July — the lowest reading since September.
And despite the market’s rally, plenty of stocks found themselves deep in the red today. Among the worst of the worst were Baidu Inc. (NASDAQ:BIDU), Ingersoll-Rand PLC (NYSE:IR) and PolyOne Corporation (NYSE:POL). Here’s why.
Baidu (BIDU)
Chinese search engine Baidu posted disappointing numbers for its recently completed quarter. Whereas the pros were looking for a profit of $1.87 per share, the company only posted income of $1.81 per share of BIDU. Though revenue of $2.67 billion was right on target with analyst projections, it was still well short of the $2.93 billion to $3 billion Baidu had suggested earlier.
It wasn’t the trailing numbers that drove BIDU 15% lower today, however. It was the outlook and downgrades of BIDU shares following the company’s announcement that it would be investing heavily over the course of the coming three years to better position itself and the company for the long haul.
Most of Wall Street was less than thrilled with the decision in the wake of a poor quarterly report. Summit Research/W.R. Hambrecht analyst Henry Guo may have summed it up best, however, observing:
“Considering the O2O [online to offline] competitive landscape in China, we believe the profitability drag due to O2O investment to Baidu financials will span multiple years, challenging management execution and investors’ patience.”
Ingersoll-Rand (IR)
HVAC component maker Ingersoll-Rand didn’t do very well last quarter, and further fanned the bearish flames by offering disappointing earnings guidance for the current quarter.
In its second quarter of 2015, Ingersoll-Rand earned an adjusted operating profit of $1.20 per share, falling short of the $1.23 per share of IR analysts were looking for. Revenue of $3.6 billion also missed estimates of $3.69 billion.
The company also noted that it was looking for a profit of something between $1.15 and $1.19 per share for the current quarter, though analysts had already guessed a profit of $1.20 per share of IR was in the cards.
Spooked traders sent IR shares down nearly 7%.
PolyOne Corporation (POL)
Last but not least, though PolyOne Corporation shares paid the price for the company’s earnings miss following the release of its second quarter numbers Monday morning, neither the sellers nor analysts were done with it. A downgrade of POL today sent the stock firmly down for a second day in a row.
Last quarter’s earnings from the specialty chemical company weren’t exactly awful. PolyOne earned 57 cents per share on $887 million in sales. The market, however, was looking for a bottom line of 58 cents per share of POL on $942 million in revenue.
The numbers were alarming enough to inspire a downgrade from Longbow as well as Global Hunter Securities, which in turn sent POL another 3% lower following Monday’s 8% stumble.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
