Although the recently ended trading week was one of the most bullish of the year, Friday’s action in itself was lackluster. By the time the closing bell rang, the S&P 500 was at 2,014.89, up a mere 0.07%, having no meaningful news to use as a catalyst.
Not every stock escaped the bears’ claws on Friday. Gap Inc (NYSE:GPS), Micron Technology, Inc. (NASDAQ:MU) and Alcoa Inc (NYSE:AA) all ended the week more than a little deep in the red. Here’s what went wrong.
Alcoa Inc (AA)
The third quarter earnings season didn’t get started on the strongest foot, judging from the earnings report Alcoa posted after the close on Thursday and the subsequent drubbing AA suffered on Friday.
Last quarter, Alcoa earned seven cents per share on $5.57 billion in sales. Both the top and bottom line were lower than year-ago third-quarter figures, but more damaging to AA shares was the fact that last quarter’s top and bottom line missed estimates. The pros were calling for income of 13 cents per share of AA on revenue of $5.65 billion.
CEO Klaus Kleinfeld remained optimistic about the future, pointing out that all of the company’s division besides the aluminum unit put up strong numbers and were operationally profitable. For investors though, it wasn’t good enough. AA shares closed down 6.8%.
Gap Inc (GPS)
Shares of retailer Gap lost 5% of their value on Friday after the company posted alarming same-store sales for September and then fanned those bearish flames with a lackluster forecast for upcoming Q3 numbers.
Same-store sales for Gap were down 1% last month. Old Navy did well, but it wasn’t enough to offset the 10% plunge in same-store sales reported by the company’s Banana Republic division.
While it’s not a tier-1 research house, the downgrade of GPS by MKM Partners from a “buy” to a “hold” in conjunction with MKM’s target price moving from $40 to $29 may have been a contributing factor to today’s dip.
Disappointing Q3 guidance in the shadow of recent news that Old Navy’s President Stefan Larsson — one of the company’s rare bright spots — was leaving the company also added fuel to the selling fire.
Micron Technology, Inc. (MU)
Not that hopes were particularly high that it was going to happen anyway, but to the extent there were any lingering hopes that Chinese semiconductor maker Tsinghua Unigroup would indeed acquire Micron Technology, they were dashed today.
The evidence: Rather than pursuing the purchase of Micron Technology, today, Tsinghua announced it would be investing $3.8 billion in data storage outfit Western Digital (NASDAQ:WDC).
Although that investment pales in comparison to the $23 billion offer Tsinghua made for MU in the middle of the year (and though it’s only a fraction of the total market cap presently boasted by WDC), it’s a strong hint that Tsinghua Unigroup has moved on from its ambitions to own MU outright.
MU finished the session down 3%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
