Despite the rough start, the buyers got to work pretty soon after the opening bell rang to hammer out a solid gain for the market. When all was said and done, the S&P 500 finished the day up 0.66% at 2,080.62, after investors decided the sluggish February jobs numbers release on Friday would likely mean a delay and tempering of any impending rate hikes from the Federal Reserve.
Not every stock finished Monday in the black, though. Gannett Co., Inc. (NYSE:GCI), Southwest Airlines Co. (NYSE:LUV) and Hudson City Bancorp, Inc. (NASDAQ:HCBK) all lost ground for a variety of reasons.
Southwest Airlines (LUV)
Just for the record, most airline stocks — including majors like Delta Air Lines, Inc. (NYSE:DAL) and United Continental Holdings Inc. (NYSE:UAL) — were relatively deep in the red today. Southwest Airlines was the worst of the worst, however, with LUV losing more than 4% of its value.
The pullback was spurred by a sharp rise in the price of oil, which indirectly suggests the price of jet fuel is headed higher as well.
Airline stocks have been flying high since the middle of last year, when oil prices started what would become a significant downturn. LUV gained more than 60% between August and January’s peak, as crude made its way from a June high near $107 per barrel to a low near $44 hit last month.
Crude’s starting to act like it wants to recover, with today’s 5.8% pop serving as another piece of evidence. That means higher fuel expenses for spoiled airline investors, especially Southwest Airlines shareholders today.
Hudson City Bancorp (HCBK)
In retrospect, the only thing that was truly surprising about today’s news from Hudson City Bancorp was that investors were somehow surprised enough to spur a nearly 7% plunge in the price of HCBK shares.
The news: The proposed merger of Hudson City Bancorp and M&T Bank isn’t going to happen — at least not yet — because the Federal Reserve will be unable to review the relevant details of the deal before the intended completion date of April 30.
Why wouldn’t the delay be a surprise? Well, because the deal was made in 2012 and originally slated for completion in 2013, yet the Fed has raised stymieing concerns several times in the meantime. Add another one to the list of merger setbacks HCBK investors can lament.
Gannett Co. (GCI)
Most of the time, a downgrade means an already-weak stock is pressured even lower. Every once in a while, though, a downgrade can upend a rising stock that has become a little too hot for its own good.
Just ask anyone who owned Gannett Co. before today. After a 17% runup in the value of GCI since the beginning of the year, a downgrade from FBR Capital stopped the rally in its tracks and sent GCI down 5% on Monday.
FBR analyst William Bird lowered his rating on Gannett from an outperform to a market-perform, though maintained his price target of $38 for GCI. Bird explained:
“Our outperform thesis was built on [Gannett’s] previously wide discount to its sum-of-the-parts valuation. Based on our estimates, the gap has largely closed. We also see fundamental factors that could hamper performance. Street estimates and valuations do not appear to capture public company costs and large reverse contracts to be renegotiated in 2016 [with CBS] and 2017 [with NBC].”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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