The market bounced back from last week’s sizable losses on Monday, even without the help of any particularly good news.
Even so, today’s big 1.49% advance from the S&P 500 hasn’t exactly snapped stocks back into a bigger-picture uptrend.
That’s because names like Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT), Delta Air Lines, Inc. (NYSE:DAL) and Vipshop Holdings Ltd (NYSE:VIPS) are still holding the broad market back with steep losses.
Here’s how each took a wrong turn today.
Starwood Hotels & Resorts Worldwide (HOT)
The good news: Starwood Hotels & Resorts Worldwide is being acquired. The bad news: The sales price for the chain of 1200 resorts and hotels was far less than had been anticipated in light of the rumored bidding war about to begin, sending HOT shares lower by nearly 4% on Monday.
All told, bigger peer and rival Marriott International Inc. (NASDAQ:MAR) will be acquiring Starwood Hotels & Resorts Worldwide for $12.2 billion worth of cash and stock. Specifically, HOT shareholders will be receiving $2 in cash per share plus 0.92 shares of MAR, which were trading around $73 per share as of today’s close. All told, the offer amounts to about $72 per share of HOT…
… which is much less than had been expected. The stock had been trading near $75 late last week in anticipation of an offer.
The pairing of Starwood Hotels & Resorts and Marriott International is projected to save the combined companies about $200 million per year.
Delta Air Lines (DAL)
This weekend’s terrorist attacks in Paris, France don’t appear to be an omen of more to come, and the suspension of some flights between the United States and France has already been lifted.
But investors are understandably worried that renewed global unrest could crimp travel plans. Indeed, at least some travelers have already cancelled travel plans, and more are apt to follow.
DAL closed lower on Monday, to the tune of 2.2%.
Vipshop Holdings (VIPS)
Last but certainly not least, for proof that pullbacks can take on a life of their own and become self-fueling and a self-fulfilling prophecy, look no further than Chinese e-commerce name Vipshop Holdings. VIPS fell again today, as a selloff that began last week prompted the market to view the glass as half-empty ever since.
The selling party started in earnest last week when concerns that a slow-down in China’s economy would take a bite out of Vipshop Holdings’ top and bottom lines. That day’s 7% selloff from VIPS was followed by even sharper selling on Friday, after a big cut in revenue guidance for the third quarter sent VIPS shares down by a whopping 36%.
While the lowered revenue guidance had already been priced in, the sheer size of the drop on Friday led Deutsche Bank to cut its target price on VIPS to $18.30 this weekend, sending the stock down another 9% today. That call prompted a couple more downgrades, and now Vipshop Holdings seem to be falling mostly just because the market expects it to keep losing value.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
