Once again, a lack of decisive news and a clear future left traders on the fence. Already backing away from yesterday’s buying effort, the S&P 500 ended the day at 2186.15, down a mere 0.02%.
Leading the tepid bearish charge were General Mills, Inc. (NYSE:GIS), Advanced Micro Devices, Inc. (NASDAQ:AMD) and Kroger Co (NYSE:KR).
Here’s a closer look at why each was up-ended.
Kroger Co (KR)
If you’re looking for the reason Kroger shares were down nearly 4% on Wednesday, blame rival grocer Sprouts Farmers Market Inc (NASDAQ:SFM), and Jim Cramer. Sprouts Farmers Market issued lackluster full-year guidance on Wednesday, and Cramer extrapolated its view to apply it to all grocery chains, including Kroger.
The specifics: Sprouts Farmers Market now anticipates earning between 83 and 86 cents per share of SFM for 2016, versus previous guidance of between 92 and 94 cents per share. A lowered price target for SFM, from $25 to $20, prompted a 13.7% setback for that stock.
Commentator Jim Cramer warned investors that the trouble brewing for Sprouts meant investors would be best served by also steering clear of KR shares. However, Kroger may be a worthy exception to his broad assessment.
Advanced Micro Devices, Inc. (AMD)
Were it not for one nagging detail, Advanced Micro Devices shares would have likely made solid progress today. Not only did the company win an award for its 25×20 energy efficiency initiative, its new Zen server chips are highly competitive with those made by rival Intel Corporation (NASDAQ:INTC).
The nagging detail that sent AMD shares 6.8% lower on Wednesday? It’s going to be issuing $600 million worth of AMD shares, and selling another $450 million worth of convertible debt.
That’s a big chunk of change for the $5.5 billion organization, but the setback could have been worse in light of the offering’s size. MKM Partners may have muted much of the selling effort, commenting that “While existing investors won’t like the share dilution, the reduction in interest expense offsets. We expect AMD shares to recover following an offerings-related pullback,” and maintaining its price target of $8.00 for AMD.
General Mills, Inc. (GIS)
Last but not least, General Mills may be just as optimistic about the current fiscal years as it ever was. But, it didn’t get off to a great start. The food company served up fiscal Q1 guidance that gave GIS shareholders indigestion.
All told, General Mills cautioned today that for the first quarter of fiscal 2017 — which ended in August — it would report earnings below the year-ago bottom line of 69 cents per share. Analysts were expecting a profit of 77 cents per share of GIS. Nevertheless, General Mills expects all of 2017 to be a solid year.
Earnings per share of GIS are projected to grow between 6% and 8%, despite slight weakness in sales of organic food.
GIS ended the day down 4.3%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
