Following through on yesterday’s move into record-high territory (though with more zeal than Monday’s action), the S&P 500 advanced 0.7% on Tuesday to close at 2152.62. There was no major news behind the rally. It was just built on raw momentum.
Of course, that raw momentum didn’t lift every name out there. Barrick Gold Corporation (USA) (NYSE:ABX), Fastenal Company (NASDAQ:FAST) and LendingClub Corp (NYSE:LC) each managed to log a losing day, and for completely understandable reasons.
Barrick Gold Corporation (USA) (ABX)
Finally forced to decide between gold, bonds and stocks, investors chose stocks on Tuesday, largely discarding gold and bonds in the process. Bond values were lower to the tune of 1.4% today, while gold prices fell 1.7%.
The ripple effect of gold’s meltdown was magnified for gold mining stocks like Agnico Eagle Mines Ltd (USA) (NYSE:AEM) and Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), which were down 2.2% and 4.4% — respectively — today. Leading the bearish charge for gold mining stocks, however, was Barrick Gold. ABX ended the day down more than 6%.
ActivTrades chief analyst Carlo Alberto de Casa commented on the day’s setback for gold:
“Tensions in Britain are easing for now, as the country will soon have a new prime minister. With the British pound gaining some ground, demand for gold and other safe havens is decreasing.”
The British pound’s rise didn’t mean a whole lot for the U.S. dollar on Tuesday, which was flat. Gold’s setback happened without the help of a soaring greenback, suggesting the tumble was more feeling-based than numbers-driven.
Fastenal Company (FAST)
Industrial supply outfit Fastenal fell short of analyst estimates last quarter, whether you’re talking about the top line or the bottom line.
In its second quarter of 2016, Fastenal earned 45 cents per share of FAST on $1.01 billion worth of revenue. Problem: The pros were calling for a bottom line of 48 cents per share on sales of $1.02 billion.
Fanning the bearish flames for the 3.4% FAST made today was the fact that Q2 is the third straight quarter the company missed earnings estimates, and analysts were only expecting the company to match the year-ago per share bottom line. Moreover, the pros were only calling for revenue growth of 2.5%. Fastenal Company couldn’t even pick that low-hanging fruit.
LendingClub Corp (LC)
Finally, although the news technically surfaced on Monday, it didn’t propagate — and worry LendingClub shareholders — until today. That is, the government may be about to scrutinize the online lending industry, including LC, even further.
In short, earlier this week it was made clear that the Financial Stability Oversight Council is increasingly concerned about the inherent dangers of a relatively unregulated lending industry.
Fanning the bearish flames that ultimately sent LC shares more than 6% lower on Tuesday was Monday evening’s report from the Wall Street Journal that the company’s charge-off rates had risen by 38% since 2013. The rising charge-off rate coincides with a near halving of the frequency the lender verified income for the same timeframe.
It’s not unlike the start of the subprime lending crisis of 2008, though in this case, prevention measures designed to contain such a contagion could end up crimping LendingClub’s operation.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
