What started out as a reasonably bullish day certainly didn’t end that way. There was no news behind the setback, either — traders simply chose to believe stocks were still more of a liability than an asset at their current values. The S&P 500 finished the session down 2.5%, closing at 1890.28.
It could have been worse, though… you could have owned Autodesk, Inc. (NASDAQ:ADSK), Sprint Corp (NYSE:S) or Williams Companies Inc (NYSE:WMB). Here’s what investors need to know about their sharp selloffs.
Williams Companies Inc (WMB)
Will the misery ever end for Williams Companies, and by extension, will the misery ever end for owners of related and nearly-related Williams Partners LP (NYSE:WPZ) and Energy Transfer Equity LP (NYSE:ETE)? It’s almost as if the three were in a race to the bottom today, and though WMB won that race with its 17.7% loss, all three were train wrecks on Wednesday.
Unlike the usual reason WMB has earned a spot on the “Worst 3” list of late, however, there have been whispers that the pending merger deal between Energy Transfer Equity and Williams Companies may end up falling apart before consummated.
That possibility was first floated by Hennessy Funds’ Skip Aylesworth on Tuesday, who said after both companies suffered credit downgrades, “If I was Williams, I’d look at every chance to say, ‘no, thank you,’ and go my separate way.”
The market didn’t disagree with Aylesworth’s thinking.
Autodesk, Inc. (ADSK)
In the grand scheme of things, in a normal market environment there’s nothing especially unusual or noteworthy about Autodesk, Inc. In the market’s current situation though — fighting for its life against a backdrop of nervous investors — even the smallest of red flags can have a major, adverse impact. Just ask owners of Autodesk stock, who saw their shares of ADSK slump more than 7% following reports that CEO Carl Bass recently sold more than $900,000 worth of ADSK.
It’s only a fraction of the company’s $12.36 billion market cap, and for many CEOs proceeds from the sale of stock are seen as part of a salary package. Still, with sales and profits projected to fall this year (slipping into a net loss) it’s anything but the vote of confidence the market was hoping for.
Sprint Corp (S)
Finally, a long-beleaguered Sprint saw its stock move deeper in the red today, mostly on news that its competitors were proverbially taking it up a notch. That competition? Mostly AT&T Inc. (NYSE:T).
While it’s still only an experiment being offered to DirecTV subscribers (AT&T acquired DirecTV and its customers late last year), the wireless service provider has once again begun offering unlimited-data plans… plans that largely went away a few years ago when rapidly-growing smartphone usage was taxing the capacity of most networks.
With better networks now in place, AT&T is the first to re-emerge on the unlimited data front. Fears that AT&T could reprise such plans for a wider set of consumers — and take another bite out of Sprint’s shrinking business — sent S stock down more than 8% today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
