With inflation for August rolling in even weaker than expected, investors had good reason to think a rate hike tomorrow was a little less likely. In turn, with the cheap-money environment poised to last at least a little while longer, traders were willing to be buyers on Wednesday, sending the S&P 500 up 0.87% to a close of 1995.31.
But it wasn’t a fruitful day for shares of FedEx Corporation (NYSE:FDX), Amicus Therapeutics, Inc. (NASDAQ:FOLD) and Sprint Corp (NYSE:S). Here’s why these names skipped out on the rally.
Sprint Corp (S)
In the grand scheme of things, owners of Sprint can’t be entirely surprised somebody finally called the company out for its rampant, unproductive spending.
All the same, there was just something about seeing it officially happen that spooked the broad market into selling their S shares in earnest.
That news was a downgrade of the company’s credit rating from Moody’s. Sprint bonds are now categorized as a B3, which for Moody’s is six grades below “investment grade.” Moody’s explicitly noted the company faces a troubling degree of refinancing risk, and the rating agency even went as far as to point out that the competition in the wireless industry was getting fierce.
All told, S finished the day down more than 5%, leading the large-cap losers.
FedEx Corporation (FDX)
While lower gasoline and jet-fuel costs should help widen operating margins for FedEx, what it’s saving at the pump is being offset by weakening demand for its shipping services.
All told, FedEx earned $2.42 per share on revenue of $12.28 billion in its first fiscal quarter of 2016. Both were up from year-ago comparables, though both misses estimates. Analysts were calling for a profit of $2.46 per share of FDX and a top line of $12.3 billion.
The company went on to reel in its 2016 (ending in May of next year) outlook, specifically blaming falling demand for the contracted guidance. Rather than the profit of between $10.60 and $11.10 per share the company had previously anticipated, now the shipping outfit foresees a profit of between $10.40 and $10.90 per share.
The news sent FDX to a loss of 3% on Wednesday.
Amicus Therapeutics, Inc. (FOLD)
Last but certainly not least, Amicus Therapeutics lost more than its fair share of ground on Wednesday.
Given the news from the company this morning, the near-6% tumble from FOLD comes as a bit of a surprise. Amicus Therapeutics announced it would be filing a new drug application with the FDA, asking the agency for permission to market migalastat as a treatment for Fabry disease.
The odds of an approval are decent, and it costs the company practically nothing to take a shot. Water was poured on the budding bullish flames, however, after Chardan Capital Markets downgraded FOLD from a “buy” to a “neutral” rating.
Even so, the downgrade from Chardan wasn’t a scathing review. Analyst Gbola Amusa simply noted that the odds of an acquisition at this point (with the stock still up 150% over the past twelve months and a key decision from the EU — and then the FDA — about migalastat around the corner) were on the low side.
The previous buy recommendation was largely rooted in the premise of an acquisition before the drug was as close to a couple of possible approvals as it is now.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
