Why ARM Holdings plc (ADR) (ARMH), Walt Disney Co (DIS) and Alcoa Inc (AA) Are 3 of Today’s Worst Stocks

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Largely inspired by Janet Yellen’s double-edged words regarding the economy and this year’s rate hike plans, traders responded bearishly then bullishly to the confident aspects of her rhetoric directed toward the House Financial Services Committee today. When it was all said and done, however, the S&P 500 finished the session at 1851.86, down a scant 0.02%.

Why ARM Holdings plc (ADR) (ARMH), Walt Disney Co (DIS) and Alcoa Inc (AA) Are 3 of Today's Worst StocksNot every stock escaped with just a breakeven on Wednesday, however. ARM Holdings plc (ADR) (NASDAQ:ARMH), Alcoa Inc (NYSE:AA) and Walt Disney Co (NYSE:DIS) each moved to more than a little into the red, although for understandable reasons.

Here’s what investors need to know.

ARM Holdings plc (ADR) (ARMH)

Whether the glass is half-empty or half-full for ARM Holdings is up for debate. What we can’t question, however, is the fact that ARMH shares are caught in the middle of a brutal tug-of-war between the bears and the bulls.

The bears won today’s battle, sending ARMH shares lower by more than 8%.

The selloff materialized in spite of pretty solid results last quarter; the chipmaker reported a 26% improvement in its net profits on the heels of a 15% year-over-year increase of its top line. That’s an impressive feat considering that smartphones sales growth is slowing down.

ARM Holdings performed well all the same last quarter because it has a superior technology. It’s version 8 architecture is something of the gold standard on newer mobile devices including the new iPhone.

Nevertheless, the market is concerned that the company isn’t immune to the smartphone headwind brewing. ARM Holdings even acknowledged, “Increased economic uncertainty may influence consumer and enterprise spending, potentially impacting semiconductor revenues and industry confidence.”

Walt Disney Co (DIS)

As lucrative as Star Wars: The Force Awakens was for Walt Disney last quarter, it just wasn’t enough to alleviate concerns regarding the company’s struggling ESPN unit.

Fiscal Q1 was literally record-breaking for Disney. The company earned $1.73 per share on revenue of $15.2 billion. Its studio entertainment division led the way with a 40%-plus increase in sales, translating into more than an 80% uptick in year-over-year income.

Its television efforts, however, weren’t as impressive. That division’s operating profit was down 5% on a year-over-year basis, mostly driven by weakness with its ESPN channel and diminished income from A&E. Lingering subscriber losses and mostly uncontrolled expenses for the sports network or maybe even worse by continued subscriber losses.

DIS shares finished the day down almost 4%.

Alcoa Inc (AA)

Last but not least, American aluminum icon Alcoa lost quite a bit of ground Wednesday, with AA shares falling 3.4%.

The specific reason for today’s weakness isn’t clear, although it’s been pretty well excepting that the ongoing economic slowdown in China ultimately works against Alcoa. More realistically, however, news that aluminum outfit Noranda Aluminum Holding Corp. had filed for bankruptcy spooked AA shareholders.

If weak aluminum prices have upended one of the minor players in the industry, the market may be wondering how much longer the larger players like Alcoa can last.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/why-arm-holdings-plc-adr-armh-walt-disney-co-dis-and-alcoa-inc-aa-are-3-of-todays-worst-stocks/.

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