Why American Airlines Group Inc (AAL), Royal Bank of Scotland Group PLC (RBS) and United States Steel Corporation (X) Are 3 of Today’s Worst Stocks

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In a referendum vote that shocked most of the world, Britain will begin its exit from the European Union, bringing an end to several years of (admittedly strained) membership in the political/economic bloc. Unsure of what happens now, traders chose to not take any chances and simply shed stocks until the dust settles. By the time the closing bell rang, the S&P 500 was at 2037.31, down 3.6% for the day.

Why American Airlines Group Inc (AAL), Royal Bank of Scotland Group PLC (RBS) and United States Steel Corporation (X) are Three of Today's Worst StocksLeading the bearish charge were American Airlines Group Inc (NASDAQ:AAL), Royal Bank of Scotland Group PLC (NYSE:RBS) and United States Steel Corporation (NYSE:X). Here’s what went wrong for each.

Royal Bank of Scotland Group PLC (RBS)

There’s little doubt as to what spurred the 27% tumble from Royal Bank of Scotland Group shares today — the Brexit vote. The maneuver poses a threat to the nation’s banks. Aside from potentially barring the industry’s cross-border operation rights, the ties it’s breaking with its EU trade partners could turn into outright economic stagnation.

RBS was hardly the only British bank to run into a headwind, though. Lloyds Banking Group PLC (NYSE:LYG) shares also fell 23%, while Barclays PLC (NYSE:BCS) closed 21% lower.

Even with the Brexit overhang, however, it’s possible the market unduly punished Britain’s banks. The bullish case for RBS, LYG and most others after Friday’s meltdown actually holds some water.

United States Steel Corporation (X)

British bank stocks were hardly the only stocks to get hard by Brexit on Friday, however. Stocks across the pond from completely different industries were hit similarly hard.

Case in point: United States Steel Corporation — better known as just U.S. Steel — fell more than 11% today.

The cause wasn’t the same as the reason RBS and LYG were torpedoed though… at least not directly. X was upended because commodity prices plunged, and commodity prices plunged because the U.S. dollar surged. The U.S. dollar surged because (and here’s the tie-in) the British pound got rocked, falling to a multi-decade low of $1.322 versus the U.S. dollar.

There’s more presumption than certainty with the stumble from X and its basic materials/commodities peers, but presumption still managed to do plenty of damage.

American Airlines Group Inc (AAL)

Last but not least, Brexit’s impact was far and wide today, even affecting U.S. airlines.

Yes, the plunge in commodity prices — including the 4.9% stumble from crude oil — will eventually lead to cheaper jet fuel prices, setting up cheaper operating costs for the likes of American Airlines Group and peer/rival Delta Air Lines, Inc. (NYSE:DAL).

But the ripple effect of Britain’s exit from the EU will also have a straightforward ripple effect on the economy, perhaps slowing economic growth down to a crawl. If that happens, demand for air travel could wither.

AAL ended the day down more than 11%, as it’s got more than its fair share of exposure to the European market. DAL wasn’t too far behind, though, with DAL more than an 8% loss of its own.

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/2016/06/why-american-airlines-group-inc-aal-royal-bank-of-scotland-group-plc-rbs-and-united-states-steel-corporation-x-are-3-of-todays-worst-stocks/.

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