Failing to follow through on Monday’s big gain, the S&P 500 ended the day down 0.2%, closing at 2176.12. Investors remain conflicted regarding the downside of a strong economy, which are higher interest rates. The economy’s strength and potential for rising interest rates was underscored on Tuesday by a surprisingly big increase in August’s consumer confidence reading.
The worst of the worst performers on Tuesday were Abercrombie & Fitch Co. (NYSE:ANF), Hershey Co (NYSE:HSY) and Newmont Mining Corp (NYSE:NEM).
Here’s why.
Hershey Co (HSY)
After most investors were convinced it was a done deal, food giant Mondelez International Inc (NASDAQ:MDLZ) dropped what was becoming a contentious bid for well-known candy name Hershey. MDLZ shares, largely relieved the frustrating matter is now in the past, went up nearly 4% on the news. HSY, however, fell nearly 11% as investors were shocked the buyout didn’t pan out.
It’s not a simple matter of playing too hard to get. The Hershey Trust owns the majority of HSY voting shares. It has its own responsibilities, and is not only in the midst of a board overhaul, but it is also currently under investigation by the state of Pennsylvania. It may not be willing or able to take on another distraction right now that could prevent it from giving the matter its due focus.
The pullback puts HSY shares right at the value-driven target price of $100 set by UBS now that the acquisition isn’t going to happen.
Newmont Mining Corp (NEM)
While it was a bad day for stocks, it was an even worse day for commodities. Gold prices fell 0.84% to a price of $1315.90 per ounce, pulling the highly leveraged gold miners down with it.
Barrick Gold Corporation (USA) (NYSE:ABX) and Goldcorp Inc. (USA) (NYSE:GG) were among the leaders of that bearish parade, each losing 5.2% of their value. But, Newmont Mining was the day’s biggest gold mining loser, falling 5.6% on Tuesday.
Abercrombie & Fitch Co. (ANF)
Last but not least, long-beleaguered retailer Abercrombie & Fitch came up short of its second-quarter expectations, and fanned the bearish flames that sent ANF 20% lower today by warning it likely wouldn’t be able to grow the top line this year after all.
Last quarter, Abercrombie & Fitch lost 25 cents per share on revenue of $783.16 million. Analysts were calling for a loss of only two cents per share of ANF, and sales of $787.71 million. Last quarter’s numbers also compare poorly to the year-ago profit of 12 cents per share and top line of $817.76 million. Same-store sales fell 4%.
Although no specifics were offered, Abercrombie no longer anticipates full-year same-store sales growth, despite the fact that the retailer intends to close as many as 60 of its unsalvageable stores.
Executive Chairman Arthur Martinez explained, “We’ve moved on. I don’t think the world has,” referring to the multiple gaffes former CEO Michael Jeffries managed to make. He went on to say, “We need to interrupt the predictable thinking about this company.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
