The market ended the week on a very, very low note, with the S&P 500 closing at 1880.29, down 2.16%. It’s not clear if the selloff was just a pre-long-weekend cleanout or if traders are truly fearful a new bear market is upon us … and maybe even a recession, if December’s retail sales contraction is to be trusted. Either way, today was just rough.
Leading the bearish charge were Intel Corporation (NASDAQ:INTC), Sarepta Therapeutics Inc. (NASDAQ:SRPT) and Petroleo Brasileiro SA Petrobras (NYSE:PBR). Here’s what went wrong for each one today.
Petroleo Brasileiro SA Petrobras (PBR)
Most stocks were deep in the red on Friday, though few to the same degree as Petroleo Brasileiro SA Petrobras, better known as just Perobras. PBR shares lost a more than 9% of their value, mostly on a familiar story.
On Friday, crude oil prices continued an unthinkable slide, falling nearly 6% to reach another multi-year low around $29.40. A persistent supply from Iran worked against oil prices, underscored by concerns that economic weakness from China could eventually crimp demand.
Of course, PBR is an easy target for any meltdown. Brazil’s entire government — and by extension its economy — still seems to be hanging by a thread, and could crumble at a moment’s notice. Brazil-based Petrobras wouldn’t be immune to that weakness. Indeed, the state-controlled company is especially vulnerable to a government meltdown.
Intel Corporation (INTC)
Intel was also alarmingly underwater today. All told, INTC shares finished the session 9% lower after the chipmaker warned gross margins could be shrinking in the foreseeable future.
The numbers: Intel Corporation believes its first-quarter gross margins could fall more than 6%, to 58% (give or take).
Weaker margins are ultimately the result of ongoing weakness in the PC market, and a revenue adjustment stemming from the recent acquisition of Altera.
Even with the lackluster outlook, analysts are still mostly optimistic about Intel. Credit Suisse, for example, still rates INTC as an “Outperform,” recently saying “We are maintaining our CY16 EPS of $2.50 but Street at $2.35 is likely to move higher, which relative to peers in coming weeks is likely to be a positive stand-out-in addition, we are initiating our CY17 EPS estimate of $2.85.”
Sarepta Therapeutics Inc. (SRPT)
Last but not least, Sarepta Therapeutics validated a couple of cliches on Friday. One of them was, if you live by the sword, you die by the sword. The other is, if you play with fire long enough, eventually you’ll get burned.
The fire or sword (take your pick) that punished SRPT shareholders on Friday was too much reliance on the FDA’s favor for a Duchenne muscular dystrophy treatment called eteplirsen.
Sarepta Therapeutics gained more than 160% in 2015 almost entirely on the promise of eteplirsen. The Food and Drug Administration unwound almost all of that gain today by sending SRPT more than 50% lower after writing of the trial “All in all, this was a comparison of only 4 vs. 4 patients, in the context of serious methodological concerns identified by FDA, and with considerable inconsistency for the two doses.”
The FDA committee overseeing the development of the drug will meet again next Friday to discuss eteplirsen, but things do not bode well for SRPT shareholders.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
