The luster of Monday’s big gains wore off rather quickly on Tuesday, with the S&P 500 falling just a tad despite the strong pace of housing construction starts in April. The S&P 500 finished the session at 2,127.83.
For some stocks, Tuesday’s weakness was much, much worse. Seagate Technology PLC (NASDAQ:STX), Wal-Mart Stores, Inc. (NYSE:WMT) and Halliburton Company (NYSE:HAL), for instance, fell a great deal more than the overall market did. Here’s what happened.
Wal-Mart Stores (WMT)
Wal-Mart Stores did a pretty good job, last quarter — just not good enough. Sales were up at the nation’s largest retailer, but fell short of expectations, sending WMT down more than 4%.
In the company’s first fiscal quarter of 2015, Wal-Mart earned $1.03 per share on $114.83 billion revenue. Same-store sales were up 1.1%. Problem: The pros were expecting the company to earn $1.04 per share of WMT on $116.27 billion in revenue, and same-store sales to increase 1.5%.
The company noted that a combination of higher worker pay and an adverse currency situation were the core cause of the 7% drop in net income. The market was clearly unimpressed.
Seagate Technology (STX)
Between last week’s debt-driven fund-raising and today’s pessimistic analysts thoughts on the near-term future of the PC business, Seagate Technology didn’t have much a chance.
The prod for today’s 3% pullback for STX came from Morgan Stanley analysts Katy Huberty, Joseph Moore, Keith Weiss and Grace Chen, who collectively said sales of personal computers have remained lackluster longer than expected. The group explained:
“According to our proprietary tracker, elevated US PC channel inventory was worked down during 1Q15, but is building back up in 2Q. The 33% QTD increase is consistent with the 2Q build rate the prior two years. The rebuilding of PC channel inventory in April and weaker ODM data points keep us cautious on a rebound in 2Q as we expect the recovery to largely play out in 2H15.”
Throw in the fact that Seagate Technology just issued $700 million worth of convertible notes, and an already fragile STX simply fell over the edge.
Halliburton Company (HAL)
Just for the record, most oil stocks were in the gutter today. Halliburton Company just happened to be one of the biggest and worst offenders, with HAL shares tumbling more than 3%.
At the heart of the stumble was a sharp pullback in crude oil prices; they fell nearly 4% to a close near $58 per barrel. The prod for that pullback, however, was the 1.1% rally in the value of the U.S. dollar. Since oil is priced in dollars, a stronger greenback works against the price of crude.
Fanning the bearish flames for HAL and its energy peers were expectations that the American Petroleum Institute as well as the Energy Information Administration would show a continued oil glut when they report their stockpile calculations on Tuesday afternoon and Wednesday morning, respectively.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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