Reversing course from an impressive rally on Friday, stocks spent the bulk of a wishy-washy day on the bearish side of the fence, unable to find any sort of meaningful bullish catalyst.
By the time the closing bell rang, the S&P 500 was down 1.56%, ending the session at 1877.08.
And for owners of Potash Corporation of Saskatchewan (NYSE:POT), Fifth Third Bancorp (NASDAQ:FITB) and International Paper Co. (NYSE:IP), it was worse.
These names led Monday’s bearish charge. Here’s why.
International Paper Co. (IP)
In complete defiance of this past weekend’s edition of Barron’s plainly stating “International Paper: It’s Time to Buy,” IP shares fell a whopping 10.6% on Monday following a downgrade from Citigroup.
Sandra Ward’s bullish case on IP from Barron’s stemmed from a combination of ongoing growth from Amazon.com, Inc. (NASDAQ:AMZN) — which uses cardboard boxes to ship all of those goods — along with a commodity-driven implosion of International Paper shares that greatly exceeded what was called for.
Citigroup disagreed, lowering its rating on IP from a “buy” to “neutral,” and simultaneously lowering its price target from $45 to $38. Although this month’s price cuts for its paper products could be a one-time move, Citigroup recalls that paper-pricing cuts tend to unfurl for periods of time.
Potash Corporation of Saskatchewan (POT)
Potash Corporation of Saskatchewan — better known as just Potash, after one of its key products — was already on the ropes following some concerning news of a mine closure that ultimately stemmed from weak demand.
The potential extent of that weakness wasn’t clear to POT shareholders until Monday, though, when chatter that its dividend payments could be cut surfaced after concerned comments were made by JPMorgan Chase.
JPMorgan analyst Jeffrey Zekauskas noted:
“Our base case is that Potash Corp. will reduce it because the dividend was set during a period of cyclical strength and a higher level of earnings and industry structure conditions that does not resemble today’s business landscape. “The dividend yield would move from almost 10 percent to 6 percent under our assumptions.”
POT shares fell more than 7%, reaching a new multi-year low.
Fifth Third Bancorp (FITB)
Last but not least, though it managed to top its fourth-quarter earnings estimates when it posted results on Thursday, Fifth Third Bancorp continued what’s now become more than a three-week losing stretch, with FITB reaching a new multi-year low today following a downgrade by Oppenheimer.
The good news: Fifth Third Bancorp earned the expected 41 cents per share last quarter, though the top line of $2.01 billion easily surpassed expectations of $1.57 billion and the year-ago total of $1.54 billion.
The bad news: In light of a big increase in revenue, earnings should have improved at least a little bit above the year-ago bottom line of 43 cents per share of FITB.
The mixed (but mostly bearish) message was enough to prompt Oppenheimer to lower its target price on FITB from $24 to $20, though it maintained its rating of “outperform.”
Spooked investors sent FITB nearly 6% lower, to a close of $15.15.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
