The bulls took decided control early on in Tuesday’s trading session, and the bears never even had a chance to wrestle it back. Fueled by stunningly strong news of new home sales in April, the S&P 500 soared to a close of 2076.06, up 1.37%, and above a key technical ceiling around 2062.
Not every stock participated in the rally effort, however. Best Buy Co Inc (NYSE:BBY), Fitbit Inc (NYSE:FIT) and Newmont Mining Corp (NYSE:NEM) were doomed from the start of Tuesday’s trading.
Best Buy Co Inc (BBY)
Reminding us that the first quarter was a torturous for retailers, Best Buy posted ho-hum Q1 numbers this morning, and then poured fuel on the fire with a tepid second-quarter outlook and news that its CFO was stepping down.
Last quarter, the prolific electronics retailer earned (operating) 44 cents per share on revenue of $8.44 billion. The bottom line nearly doubled from the year-ago profit of 36 cents per share of BBY, but sales were down a bit from Q1-2015’s top line of $8.56 billion.
Furthermore, the bottom line easily topped expectations of 36 cents, and sales rolled in better than the anticipated $8.33 billion. It was a dubious victory though.
The bulk of the prod for the 7% pullback BBY booked on Tuesday was the company’s second quarter outlook. The company now expects to post a Q2 profit of between 38 cents and 42 cents per share, versus analyst expectations of 50 cents per share of BBY, on average.
The salt in the wound: CFO Sharon McCollam will be stepping down in June, setting up another potential disruption for the already-struggling company.
Fitbit Inc (FIT)
Fitness watchmaker Fitbit saw its shares fall 4.6% today, as the attorney leading a class-action lawsuit against the company garnered another piece of damning evidence today.
The suit in question, first filed in January, alleges that contrary to Fitbit’s claims, its watches are woefully inaccurate heart rate meters. The company has disputed the allegations, but the market learned this morning that a study performed by California State Polytechnic University confirms Fitbit’s Surge and HR wrist-worn devices are indeed dangerously inaccurate.
With the fraud case bolstered, owning FIT stock has now become little more than a coin toss.
Newmont Mining Corp (NEM)
Last but not least, gold miner Newmont Mining may have been one of the leaders of Tuesday’s weakness, but it was hardly alone; plenty of its gold mining peers like Goldcorp Inc. (USA) (NYSE:GG) and Barrick Gold Corporation (USA) (NYSE:ABX) were right behind. NEM just happened to be a bit worse than the rest, losing more than 6% of its value on Tuesday.
The reason is the usual suspect — gold prices slumped nearly 2% after the U.S. dollar surged to multi-week highs. The miners took exaggerated losses compared to gold’s dip; however, because the dollar now looks like it’s in a full-blown uptrend that could weigh in on gold for a while.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
