The initial reaction to this morning’s encouraging jobs report for March was bearish — traders worried that any hint of economic strength might accelerate the Federal Reserve’s rate hike plans for 2016. With more time to think about it though, investors decided the “Goldilocks” situation meant there’s more liability in not owning stocks than there is in owning them. The S&P 500 finished the day at 2072.78, up 0.63% for the session, and up 1.8% for the week.
Friday wasn’t a winner for all stocks, however. United Continental Holdings Inc (NYSE:UAL), Marriott International Inc (NASDAQ:MAR) and BlackBerry Ltd (NASDAQ:BBRY) each finished the day rather deep in the red.
Here’s what traders need to know.
United Continental Holdings Inc (UAL)
Just for the record, none of the major airline stocks had a particularly encouraging Friday. United Continental Holdings was the worst of the worst, however, dishing out the biggest loss to most investors.
UAL ended the day down more than 5%.
The prod for the pullback? Deutsche Bank lowered its ratings on airlines as a group, while CRT Capital Group did the equivalent by reducing its earnings estimates for United Continental Holdings, Delta Air Lines, Inc. (NYSE:DAL) and American Airlines Group Inc (NASDAQ:AAL).
Deutsche Bank analyst Michael Linenberg explained:
“We are lowering our rating on American Airlines, Delta Air Lines, United Continental and Hawaiian Holdings shares from Buy to Hold as several of our key macro indicators are suggesting a more challenging environment for 2016. More specifically, we have observed a slowdown in US corporate profits which is a concern given that they are a leading indicator of economic activity, and therefore, could lead to reduced demand for corporate travel.”
Marriott International Inc (MAR)
It’s a bit of a confusing love triangle, but MAR shares were hit hard today following news that Chinese insurer Anbang was giving up on its bidding war with Marriott to acquire Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT).
Marriott International was all set to purchase Starwood a few weeks ago, when at the 11th hour Anbang stepped in with a better offer. A bidding war ensued, and as is the case with any auction, it didn’t take much for the bidding to reach uncomfortable prices. Anbang had second thoughts about its offer, retracting it, leaving Marriott as the highest (though only other) bidder.
Problem: While Marriott International was the winning bidder, some MAR shareholders think the bidding war meant the hotel chain paid too much for Starwood Hotels & Resorts with its $13.6 billion offer. The original offer was only $12.2 billion.
MAR ended the day down nearly 6%. HOT was down almost as much.
BlackBerry Ltd (BBRY)
Last but not least, BlackBerry may be transitioning into a software company, but the progress it’s making on the software front isn’t materializing as fast as its hardware and related services business is imploding.
Last quarter, BlackBerry lost 3 cents per share on revenue of $464 million. The bottom line beat the loss of 10 cents per share analysts were expecting, but the top line fell well short of the expected revenue of $563.2 million. Sales were down 30% on a year-over-year basis.
CEO John Chen put the requisite positive spin on the quarter’s results, saying:
“Overall, BlackBerry’s Q4 performance was solid as we made progress on the key elements of our strategy, which are to grow software faster than the mobility software market, achieve device profitability and generate positive free cash flow.”
Investors weren’t buying it though, sending BBRY shares down 7% on the unimpressive software revenue growth against a backdrop of the steep 53% decline in smartphone sales.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
