Spurred by a relatively positive employment report for November and dismissive of the fact that oil prices are going to remain suppressed for at least a little while longer, investors finished the week in a very bullish mood. The S&P 500‘s advance of 2.05% on Friday left it at 2,091.69, almost where it closed a week ago.
Not every stock participated in the rally, however. Canadian Pacific Railway Limited (NYSE:CP), NRG Energy Inc (NYSE:NRG) and Kinder Morgan Inc (NYSE:KMI) were facing a headwind in the midst of the market’s tailwind. Here’s what investors need to know.
Kinder Morgan Inc (KMI)
Kinder Morgan has once again made its way to the daily “Worst three” list, although not for any new reason. Rather, the reason KMI was a miserable performer on Tuesday, Wednesday and Thursday is the same reason KMI led the market’s bearish charge on Friday with a near-13% stumble.
Just for the record, yes, yours truly here was the same observer who on Thursday morning suggested Kinder Morgan was a buy simply because it was at the point where it truly was impossible for things to get worse. Though the market disagreed in the meantime by sending KMI even lower than Wednesday’s closing price, I stand by that call. Nevertheless, lingering concerns over its threatened dividend and potentially rising interest costs are still weighing on traders’ minds.
The pipeline owner/operator outright said in a press release posted this morning that its dividend would remain intact in the coming year, but the market dismissed it, perhaps more concerned about the 2.5% tumble oil prices took today.
It should be noted that Friday’s huge volume from KMI has even greater capitulatory implications.
Canadian Pacific Railway Limited (CP)
Already at a loss for the week, the sellers turned up the heat on Canadian Pacific Railway Limited today following disappointing news that the stagnating rail carrier’s bid for Norfolk Southern Corp. (NYSE:NSC), with Norfolk Southern all but saying “and don’t bother trying again.”
“Canadian Pacific’s short-term, cut-to-the-bone strategy could cause Norfolk Southern to lose substantial revenues. … The proposed transaction risks harm to vital transportation infrastructure and the communities we serve. … At any price, the regulatory risks, including the likelihood to close, remain the same.”
CP shares fell more than 4% on the news of the rejected offer, and closed 9% lower for the week.
NRG Energy Inc. (NRG)
Last but not least, in light of the news from NRG Energy earlier this week about the sale of two power plants, coupled with the fact that NRG shares were down more than 60% year-to-date as of the end of last week, today’s news from NRG Energy isn’t entirely surprising. All the same, investors were surprised enough to send NRG down 18% following this morning’s announcement that CEO David Crane was stepping down.
Despite the company’s and the stock’s poor performance of late, many still felt Crane was right for the role. As Fortune‘s Nicholas Moore Eisenberger said it, “America’s energy industry just lost a visionary leader,” explaining that Crane’s good ideas were wasted on an industry that seems intent on remaining stuck in an old-school mindset.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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