As was widely expected, the Federal Reserve ratcheted up the Fed Funds Rate today, from 0.25% to 0.5%. Still, the dovish rhetoric accompanying the decision was more than enough to send the broad market considerably higher. The S&P 500 Index closed at 2073.07, up 1.45%. It remains to be seen how long that effort will last.
It wasn’t a winning day for all stocks, however. Leading a bearish charge were Pioneer Natural Resources (NYSE:PXD), Mobileye NV (NYSE:MBLY) and Global Payments Inc. (NYSE:GPN).
Here’s what investors need to know about Wednesday’s three worst stocks.
Pioneer Natural Resources (PXD)
Pioneer Natural Resources was the biggest oil and gas name to lose ground today on a steep dip in the price of oil.
More prominent players like Devon Energy Corp. (NYSE:DVN) and Halliburton Company (NYSE:HAL) were deep in the red on the heels of a near 4% tumble in the price of oil Wednesday. Pioneer Natural Resources was the biggest loser in terms of the size of the loss, however, with PXD down 7%.
The pullback in oil prices stemmed from the surprisingly large increase in the amount of oil stockpiled as of last week. Analysts were looking for a modest decline of 1.4 million barrels, but the EIA said we actually added 4.8 million barrels to the stash, bringing the total to just under 491 million barrels … an unusually high level for any time of year, but especially this time of year.
Global Payments Inc. (GPN)
The premise may be savvy, but the price Global Payments is paying to acquire Heartland Payment Systems, Inc. (NYSE:HPY) is anything but right.
That the word from GPN shareholders anyway, who sent the stock down 8% after Global Payments announced it would be spending a whopping $4.3 billion to purchase peer and rival Heartland Payment Systems. For perspective, Heartland has generated $2.59 billion worth of revenue for the past four quarters, and turned $42.2 million of that into net income (an unusually low level of earnings).
While the deal is expected to save $125 million per year once completed, it still has its critics. SunTrust Robinson Humphrey analyst Andrew Jeffrey flatly said of the GPN acquisition “At first blush, the purchase price seems aggressive … [the deal] seems expensive to us.”
Mobileye NV (MBLY)
Last but not least, Citron Research’s Andrew Left is at it again, taking blunt shots at companies he thinks could be easy targets, and in some cases, stocks he has shorted.
Wednesday’s target was car-safety sensor maker Mobileye NV, and not for the first time. Citron has actually been after Mobileye since September when Left wrote:
“Mobileye’s management is riding the hype cycle of the “self-driving car” story, a decades-long high-stakes technology bet which the operators of this small fabless chip manufacturer know they can never be a serious player in … Investing in this company is a losing bet on a blue-sky future that just does not exist.”
Left stirred the point again today, however, with a tweet in reference to MBLY.
Unsure if Left was going to turn up the bearish heat on the stock, traders pulled MBLY down more than 7% on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
