The stock market finished the week on a strong note Friday, as sunny corporate earnings from blue-chip bellwethers gave investors renewed confidence in the American economy.
While the first half of October was plagued by fears of Europe’s weakening growth prospects and fears of a possible Ebola epidemic, most major stock indices have rebounded sharply from their monthly lows.
Despite today’s bullishness, Amazon.com (AMZN), Ford (F) and Helmerich & Payne (HP) each lost major ground, finishing as three of today’s most notable decliners.
Amazon.com (AMZN)
2014 has been a pretty horrendous year for AMZN stock. Even before today’s precipitous 8.3% fall on Friday, AMZN shares were down more than 20% on the year as investors got fed up with the e-commerce titan’s apathetic view towards margins and net income.
Unfortunately, it was more of the same from Amazon in the third quarter, as the Seattle, Washington-based company posted a record loss. Amazon managed to lose $437 million, or 95 cents per share, in the period despite logging $20.58 billion in sales. Both figures missed Wall Street estimates, which called for an EPS loss of just 74 cents on revenue of $20.84 billion. AMZN took a $170 write-down on its namesake Amazon Fire Phone, and also disappointed with its fourth-quarter revenue guidance.
Consensus estimates called for sales to grow by about 20% during the holiday quarter. Instead, AMZN sees sales growth in the 7% to 18% range. I don’t think the woes are over for AMZN stock.
Ford (F)
It wasn’t just spend-happy Silicon Valley stocks facing pushback from Wall Street on Friday. Ford Motor Company, a longtime staple of American industry, also took a hit. F stock tumbled 4.3% today, succumbing to the same fate
General Motors (GM) stock did yesterday on the heels of its own underwhelming earnings report.
Technically speaking, Ford’s third-quarter results didn’t actually disappoint. The Dearborn, Michigan automaker logged sales of $34.9 billion, handily beating the consensus $33.1 billion estimate. Ford also topped earnings estimates, posting EPS of 24 cents against calls for 19 cents. Unfortunately the top- and bottom-line beats weren’t enough to save F stock, as the fundamental trend in both revenue and earnings remained downward-sloping.
Helmerich & Payne (HP)
The last of the big-name decliners was oil and gas driller Helmerich & Payne. HP stock lost 1.8% as crude oil prices continued to fall. Trading as high as $103.66 per barrel just four months ago, crude oil has tumbled more than 20% and stood just north of $81 per barrel in the late afternoon. HP stock’s recent decline has almost exactly mirrored the oil price decline, as HP shares shed just over 20% in the same period of time.
The question most Helmerich & Payne shareholders probably have bouncing around their heads is this: Just how low can oil go? I don’t have the answer to that question, but I think that given reports of declining Saudi Arabian supply and a fairly robust U.S. economy should put a floor on oil prices that isn’t notably lower than current levels.
If and when oil prices stage a comeback, HP stock should recover. Investors also have at least three attractive ETF options to play a rebound in oil prices as well.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid.