With the nation’s inflation rate holding at a tepid 0.17% for August and the perceived need for a rate hike next week diminished, investors found enough of a reason to sparingly tiptoe back into stocks in front of the weekend. All told, the S&P 500 finished the day at 1961.05, up 0.45%.
It wasn’t a solid finish to the shortened trading week for every stock, however. Mattress Firm Holding Corp. (NASDAQ:MFRM), Marvell Technology Group Ltd. (NASDAQ:MRVL) and Petroleo Brasileiro Petrobras SA (NYSE:PBR) were all deep in the red on Friday. Here’s what happened.
Petroleo Brasileiro Petrobras SA (PBR)
Another bad day for crude oil meant another bad day for oil and energy stocks, but for Petroleo Brasileiro Petrobras more so than any other.
Plains All American Pipeline, L.P. (NYSE:PAA) took a 5.5% hit, and Continental Resources, Inc. (NYSE:CLR) closed 3.6% lower. But PBR took the biggest hit of all among the majors, losing 6% of its value on Friday.
The prod for the bulk of the pullback from PBR was a pessimistic oil outlook posted by Goldman Sachs Group Inc (NYSE:GS), which sees the oil supply glut worsening in the future — so much so that it hasn’t ruled out the possibility that crude prices could fall to as low as $20 per barrel.
PBR was given a bit of an extra bearish nudge, however, by the fact that a downgrade of Brazil’s credit rating ended up being taken out on debt-dependent Petroleo Brasileiro Petrobras. Petrobras’ bonds are now considered “junk” bonds.
Marvell Technology Group Ltd. (MRVL)
There’s nothing more detrimental to a stock than the market learning that the company is being probed because it may have botched the way it calculated its previously posted results.
Just ask owners of Marvell Technology Group, who watched MRVL shares tumble 16% today after the company disclosed it was reviewing its second-quarter results for fiscal year 2016, scrutinizing how and when it recognized some of its revenue.
It took little time for the critics and lawyers to crawl out of the woodwork, but perhaps nothing was as damning to MRVL as a downgrade and corresponding commentary from Susquehanna Financial. Susquehanna analyst Chris Caso noted of PBR when lowing the firms opinion from “positive” to “neutral”:
“We consider the stock to be unownable during such an investigation, and it will likely take a considerable amount of time for investors to regain confidence in management. The company also released July quarter results, and revenue came in at the low end of guidance, largely consistent with our prior expectation — though the actual amount of revenue has now been clouded by the investigation.”
Mattress Firm Holding Corp (MFRM)
Last but far from least, Mattress Firm shares woke up on the wrong side of bed on Friday, after the company posted nightmarish second-quarter results.
For Q2, Mattress Firm earned 67 cents per share on $661.1 million in revenue. Analysts, however, were looking for a bottom line of 72 cents per share of MFRM and a top line of $664 million.
Making matters even worse for Mattress Firm shareholders, the company lowered its full-year income forecast from a profit of between $2.50 and $2.70 per share to a range of between $2.30 and $2.45 per share.
The reason for the shortcoming? As it turns out, plunging oil prices have even hurt mattress sales. The company said in areas where the oil industry employs a large swath of Mattress Firm’s target market, demand has been waning along with oil prices.
MFRM closed 23% lower today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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