Despite an increasingly hawkish Federal Reserve, and perhaps inspired by unexpectedly strong automobile sales for December, stocks logged another daily gain on the second trading day of 2017. The S&P 500‘s close of 2,270.75 was 0.57% better than Tuesday’s last trade, and pushes the index within sight of a record high of 2,277.53.
The rally didn’t include Kroger Co (NYSE:KR), Valero Energy Corporation (NYSE:VLO) and Cisco Systems, Inc. (NASDAQ:CSCO), however. These three names drifted lower, even as most other stocks made forward progress.
Cisco Systems, Inc. (CSCO)
It wasn’t a horrific setback for Cisco Systems shares today, though it came at an inconvenient time for recent CSCO investors who had good reason to expect bullishness.
As of the end of 2016, CSCO qualified as one of the ‘Dogs of the Dow’ for 2017… an underperformer among the Dow Jones Industrial Average’s 30 names in 2016 that sets it up as a big winner in the subsequent year. Cisco shares were only up 11% last year, and the Dow gained a little more than 13% in 2016. Any budding rally CSCO was prepared to start this week, however, when TheStreet.com’s Chris Laudani reminded the market that the networking giant isn’t especially well-equipped for growth in 2017. [For the record, that’s not an assessment this investor/reporter agrees with.]
CSCO ended the day down 0.6%, and has largely been left out of the post-election rally.
Valero Energy Corporation (VLO)
Don’t look for a specific reason Valero Energy shares fell 3.6% on Wednesday — you won’t find one. Oil was actually up 1.5% today, and the dollar was down about half a percent. Yet, there it is … VLO was decidedly in the red. Peers Tesoro Corporation (NYSE:TSO) and Marathon Petroleum Corp (NYSE:MPC) were in the red as well.
Although there was no specific prod for the pullbacks, Valero did make for an easy profit-taking target. VLO shares had advanced 49% from their July low, and would-be profit-takers were getting antsy. Some of them began trickling out today.
That said, investors may also be increasingly concerned that the U.S. dollar is more likely to rise than fall in 2017. That would establish bearish pressure on crude oil prices.
Kroger Co (KR)
Finally, like CSCO, grocer Kroger found itself in the sights of an investing pro on Wednesday, sending KR shares lower to the tune of 1.4%.
Wolfe Research did the deed, putting Kroger on a list of six stocks likely to move lower in the foreseeable future. Wolfe Research is hardly alone in its doubts that Kroger’s future is especially compelling, however. Analysts collectively rate KR between a “Hold” and a “Buy,” which is unenthused in light of the analyst community’s normally bullish bias. The collective opinion is becoming increasingly bearish too.
Today’s pullback translates into nearly an 8% decline from the stock’s mid-December peak.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.