Between decent construction spending for October, strong auto sales for November, and a better-than-expected ISM Index reading for last month, stocks were able to start Thursday in positive territory. They just couldn’t hold onto that gain. The S&P 500‘s close of 2,191.08 was 0.35% worse than Wednesday’s last trade.
Leading the bearish charge were Express, Inc. (NYSE:EXPR), Dollar General Corp. (NYSE:DG) and Nvidia Corporation (NASDAQ:NVDA). Here’s a closer look at why each was hit harder than most other stocks.
Nvidia Corporation (NVDA)
Computer chip company Nvidia ended the day in the red Thursday, but you can blame Amazon.com, Inc. (NASDAQ:AMZN) for the setback.
That’s because at AMZN’s Amazon Web Services conference hosted earlier this week, the e-commerce giant alluded to the possibility that it would be switching to new chipsets to power the servers that deliver its AWS service. Nvidia is the preferred provider of the GPUs (graphics processing units) right now, but that role is now threatened.
While Nvidia doesn’t need Amazon’s business to survive, it is a sizeable partner. Perhaps more alarming to NVDA shareholders is the possibility that other users are going to take Amazon’s lead and find other hardware to run their cloud computing products.
NVDA ended the day down 5%.
Dollar General Corp. (DG)
One would have thought that a big Q3 earnings beat for Dollar Tree, Inc. (NASDAQ:DLTR) would have meant a similar bear as similarly bullish response from value-oriented rival Dollar General. One would have been wrong, however. Dollar General missed its third-quarter estimates, and DG shareholders paid the price in the form of a 5% setback.
For the quarter ending in October, Dollar General earned 84 cents per share on sales of $5.32 billion. The top and bottom lines missed estimates for a profit of 93 cents per share of DG and revenue of $5.37 billion. Worse, same-store sales fell 0.1% versus expectations for a 0.8% improvement, leading to a sizable 7% decline on overall net income.
A key headwind working against DG is the contraction of the Supplemental Nutrition Assistance Program in several states where Dollar General operates.
Express, Inc. (EXPR)
Finally, apparel retailer Express may have topped its Q3 estimates, but a lackluster Q4 outlook was more than enough to make EXPR shareholders look past last quarter, and send shares 20.4% lower.
Last quarter, Express earned 15 cents per share on sales of $506.1 million. Pros were calling for a bottom line of 31 cents per share and a top line of $497.1 million. Sales were down 7% on a year-over-year basis, and per-share income was more than cut in half. Same-store sales were off by 8% (although analysts were expecting worse).
Fanning the bearish flames that scorched EXPR on Thursday, however, was the fourth-quarter guidance. Express anticipates earnings between 26 cents and 30 cents per share of EXPR for the quarter currently underway, versus an analyst consensus of 55 cents. Same-store sales growth is expected to be in the low single-digits at best, and possibly negative.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
