Uninspired by strong existing home sales last month, but spooked by the surprisingly big dip in consumer confidence for the current month, the sellers took charge early on in the day, and never let go. The S&P 500 finished the day at 1921.27, down 1.25%.
It could have been worse, however, and for owners of Vale SA (NYSE:VALE), Fitbit Inc (NYSE:FIT) or Western Digital Corp (NASDAQ:WDC), it was. These three names lost a great deal more ground than the broad market did. Here’s what investors need to know.
Western Digital Corp (WDC)
A chain-reaction of failed takeover attempts worked against a handful of digital storage maker stocks on Tuesday. But, Western Digital from every broken link in that chain, with WDC shares losing more than 7% of their value.
The pullback got started after Chinese Technology company Unisplendour canceled its plans to make a $3.8 billion investment in Western Digital. That, in turn, forced Western Digital to rewrite its plan to acquire rival data storage company SanDisk Corporation (NASDAQ:SNDK); the funding from Unisplendour was an integral part of the offer Western Digital was making to SNDK shareholders. That offer was lowered from $19.0 billion to $15.8 billion.
The Unisplendour change-of-heart suspiciously came when the Treasury Department’s Committee on Foreign Investment in the United States announced it would be scrutinizing the deal.
Vale SA (VALE)
As if Vale didn’t have enough headaches on its plate right now dealing with an implosion of the Brazilian economy as well as an implosion of commodity prices, the flames of bearish frustration were fanned further today after mine workers protested their lack of bonuses.
The protests materialized in the form of a blockade of nine of the company’s iron mines in Brazil after waning earnings lead the company to decide it would not be paying bonuses to its miners. The blockade has since been disbanded. The corresponding strike, however, is reportedly still underway until the workers’ union makes a decision on the matter. The union and the workers claim the bonus is required by contract.
VALE if ended the day down more than 6%.
Fitbit Inc (FIT)
Last, but certainly not least, beleaguered smartwatch maker Fitbit — already down 68% from its August high — fell a another 21% today after releasing a disappointing first-quarter outlook.
Per this morning’s announcement, Fitbit expects to earn one cent per share on revenue of $430 million. The pros, however, or a expecting a bottom line of 25 cents per share of FIT and a top line of $485 million.
Analysts were brutal in the aftermath of the news. Global Equities Research Trip Chowdhry said, “Gradually the market for single-purpose devices (Fitness tracker) is heading toward zero and there is nothing FIT can do to reverse the trend,” while Pacific Crest Securities analyst Brad Erickson noted, “We see little likelihood of dispelling anytime soon the longer-term bear thesis of slowing growth, pricing pressure and longer-term commoditization.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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