The bulls tried to pull the market out of the hole it was in at the open this morning, but when all was said and done, the early rally effort merely managed to set up an even higher intraday tumble. By the time the closing bell rang, the S&P 500 was at its low for the day, and still picking up bearish steam. The index closed at 2079.09, down 0.81% for the day, mostly on Brexit concerns.
Leading Monday’s bearish charge were American Airlines Group Inc (NASDAQ:AAL), OraSure Technologies, Inc. (NASDAQ:OSUR) and Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR). Here’s a closer look at why each was doomed from the start of Monday’s trading.
American Airlines Group Inc (AAL)
It wasn’t the only airline to tank on Monday, but the 4% plunge from American Airlines Group — given the company’s market cap — dished out the greatest degree of pain.
The prod was this weekend’s mass shooting at a gay club in Orlando, Florida, which claimed the lives of 50 and injured another 53. Further fueling the selling was a bombing at a Shanghai airport this weekend.
The Orlando shooter, Omar Mateeen, claimed to be a member if ISIS during the shooting. The market is presuming the act may be a sign of a new wave of other terrorist acts, and since airplanes are particularly vulnerable to terrorism, most airline stocks were down today in anticipation of a travel lull.
OraSure Technologies, Inc. (OSUR)
Raymond James pulled the rug out from underneath OraSure Technologies shareholders on Monday, downgrading the stock, and sending OSUR more than 12% lower.
The specifics: Raymond James had scored OSUR as an “Outperform,” but lowered its opinion to a mere “Market perform” today when it got within striking distance of the firm’s target price of $8.00.
Rather than pushing the target higher, analyst Nicholas Jansen believes OraSure fairly reflects its risk/reward scenario, as a long-term contract inked in 2014 could soon be cancelled with only six months’ notice, and margins have likely reached their maximum plausible levels.
Petroleo Brasileiro SA Petrobras (ADR) (PBR)
Last but not least, as if the sheer political anarchy in Brazil against the backdrop of falling crude oil prices wasn’t enough for Brazilian energy company Petroleo Brasileiro SA Petrobras (aka “Petrobras”) to deal with, the sellers tore into PBR indiscriminately on Monday on the heels of news that the struggling company would soon be facing competition that is even more formidable.
Rival Ultrapar Participacoes SA (ADR) (NYSE:UGP) announced it would be acquiring Alesat Combustiveis, giving it greater scale, and making it even more of a powerhouse.
Fanning the bearish flames were aftershocks of the renewed uncertainty of the United Kingdom’s membership in the European Union. Though such a maneuver wouldn’t directly affect Brazil or Petrobras, it would rock all foreign exchange rates, and could in turn, shatter a fragile Brazil.
PBR would likely tumble in step with the country’s stability. The stock closed more than 4% lower on Monday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
