Stocks cratered on Tuesday, as fears surrounding Europe’s economy continued to weigh on Wall Street.
The International Monetary Fund downgraded its global growth forecast for 2015 from 4% to 3.8%, sending markets broadly lower. While the painfully gradual U.S. recovery is expected to continue next year, the IMF noted a maturing Chinese economy, troubles in the eurozone and increased geopolitical risks as downside concerns going forward.
The Dow Jones Industrial Average erased 272 points, or 1.6%, in light of the pessimistic outlook, as selling accelerated into the afternoon. But while the Dow’s losses were steep, Xoom (XOOM), Best Buy (BBY) and General Motors (GM) stock each suffered far worse than the blue-chip index:
Xoom, a digital money transfer service, fell big-time for a second straight day, plunging 8.3% in trading Tuesday. That followed 7.6% losses for XOOM stock yesterday after research firm Evercore Partners downgraded the stock from “equal weight” to “underweight.” Evercore also slashed its price target on shares from $15 to $10. With PayPal set to be unshackled from eBay (EBAY) next year and Western Union (WU) also reportedly doubling down on efforts in the digital transfer arena, the $730 million Xoom faces some stiff competition.
Best Buy (BBY)
EDITOR’S NOTE: Updated to reflect Schulze’s interest in funding the Richard M. Schulze Family Foundation.
Best Buy stock also finished as a major decliner today as investors continued to react to heavy insider selling in the consumer electronics retailer. Insider Richard Schulze sold about $2.2 million worth of his stake on Friday, Oct. 3, and shares lost 6.1% Tuesday, putting BBY’s losses at nearly 10% since the news came out. He also sold $16.8 million worth of BBY stock on Sept. 29. The large selling comes as Schulze is looking to fund his national family foundation. While insider selling is a good thing to keep your eyes on, the underlying business is more important. Best Buy isn’t going under anytime soon, and with the holiday season approaching and the newest line of GoPro products featured prominently on its shelves, we know BBY will be getting some foot traffic.
General Motors (GM)
GM stock lost 5.9% Tuesday, putting General Motors down 22% in 2014 and more than 15% in the last three months alone, as the General Motors PR nightmare continues and the automaker is forced to continue recalling its vehicles. Blue Chip Growth editor Louis Navellier noted that GM’s recalls — which total more than 30 million vehicles in 2014 already — contribute to his “F-rated strong sell” rating on GM stock. Morgan Stanley also decreased its price target on GM stock from $29 to $27 per share, citing expectations for lower earnings next year.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.