Traders were still celebrating Wednesday’s decision from the Federal Reserve to dial back its rate-hike plans this year, and they came back in the same buying mood they ended Wednesday’s session in, sending the S&P 500 up 0.66% to a close of 2040.59.
Thursday wasn’t a bullish day for all stocks, however. Amazon.com, Inc. (NASDAQ:AMZN), Eli Lilly and Co (NYSE:LLY) and Jabil Circuit, Inc. (NYSE:JBL) all still ended the session in the red, although for understandable reasons.
Amazon.com, Inc. (AMZN)
In the grand scheme of things, it shouldn’t be that big of a deal. Big corporations win and lose business every day. In this particular case though, the news is a big deal because it may point to a weakness that up until today had been underappreciated.
The news: Apple Inc. (NASDAQ:AAPL) has chosen Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) over Amazon Web Services to deliver some of its recent cloud computing needs. Under this deal, AAPL is planning to spend between an estimated $400 million to $600 million with the company formerly known as Google to meet its need.
To be clear, Apple is still using Amazon Web Services as well, though less often than before. Investors, fearing Apple’s choice may indicate a deeper problem with the e-commerce giant’s cloud offering, sent AMZN nearly 3% lower on Thursday.
Eli Lilly and Co (LLY)
What do you do when your drug doesn’t live up to expectations?
You change those expectations to something you can live up to. That’s what Eli Lilly tried to do with its Alzheimer’s drug Solanezumab, but LLY shareholders weren’t buying it, sending the stock nearly 5% lower today.
Long story made short, on Tuesday afternoon, drugmaker Eli Lilly reported it is was altering the primary end goal of its Expedition3 trial — a test of Solanezumab as a treatment for mild Alzheimer’s dementia — to only a measurable improvement of cognition. Before, the company was looking for improvement of both function and cognition. Solanezumab will still be measured as a therapy for functionality, but it’s now only a secondary endpoint.
It’s not earth-shattering; biopharma companies choose to fight battles they know they can win, and change the battle so they can win it. Having had a couple of days to think about it though, LLY shareholders have decided it’s a glass-half-empty situation for a drug that was already skating on thin ice.
Jabil Circuit, Inc. (JBL)
Last but not least, Jabil Circuit shares ended Thursday down to the tune of 10% after releasing an alarming full-year outlook.
Jabil Circuit, which supplies Apple among other technology names, reported miserable fiscal Q2 numbers. The company earned 46 cents per share on sales of $4.4 billion, versus analyst expectations for a profit of 52 cents per share and a top line of $4.54 billion.
The bulk of the selling avalanche, however, was inspired by a lackluster outlook for 2016. Jabil had been calling for a profit of $2.65 per share of JBL, but has since dialed that figure back to only $2.12. The market extrapolated the numbers and used them to assume Apple is under similar fire. Pundit Jim Cramer opined:
“Jabil is saying that the orders have pretty much stopped abruptly. They’re saying that they didn’t lose the Apple business to anyone else. Be cautious, Apple could be under pressure cause of Jabil.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
