Following through on Tuesday’s Janet Yellen-inspired rally, and partially fueled by more “Goldilocks” job news (not too hot, not too cold), the bulls dug in again on Wednesday, pushing the S&P 500 up 0.44% to a close of 2063.95.
Not every stock was able to get in on that rally, however. Owners of Boeing Co (NYSE:BA), Paychex, Inc. (NASDAQ:PAYX) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) were all left standing on the outside looking in.
Here’s the deal.
Boeing Co (BA)
The near 2% plunge Boeing shares dished out today isn’t earth shattering. But, it is a stark relative to the respectable gain the overall market made … particularly against the backdrop of alarming news BA delivered on Wednesday.
In short, aircraft maker Boeing says it will eliminate anywhere between 4,500 and 8,000 jobs within the next few months as part of an ongoing stream of drastic cost-cutting measures.
Boeing has indeed been cutting expenses where it can for the past several months, so the news isn’t entirely out of character. Yet, the decision doesn’t quite jive with the bullishness that has largely surrounded BA for the past few weeks, including the boost that bullishness has gotten from the company’s own optimism.
However, BA shareholders are seeing a little more in the announced job cuts than just a way of reducing expenses. It’s being interpreted as an omen that the company isn’t stoked about its foreseeable future.
Paychex, Inc. (PAYX)
Paychex became yet-another cliched victim of the “buy the rumor, sell the news” phenomenon, meeting its third-quarter expectations then watching PAYX slump more than 2% anyway.
Last quarter, Paychex earned 50 cents per share on $752.6 million in sales. The pros were calling for a bottom line of 50 cents per share of PAYX, and a top line of $751 million. Its full-year revenue outlook also aligned with the current analyst estimates.
So why the big pullback from PAYX?
It has increasingly become the case that a mere “met” of earnings and revenue estimates is no longer sufficient. Investors have come to expect earnings and sales beats as a regular course of action. Paychex didn’t do that this time around.
Valeant Pharmaceuticals Intl Inc (VRX)
Last but not least, just when it looked like things couldn’t get any worse for Valeant Pharmaceuticals — like VRX shares have finally found something akin to a bottom — the company finds another way to pour gasoline on the dying fire.
Today’s way: Already passed the expected filing date for its Q4 and full-year report, Valeant Pharmaceuticals announced today it was seeking an official extension of the April 29th deadline that, if not met, would trigger the technical default on its loans.
The permission wouldn’t be granted by the Securities and Exchange Commission. Rather, the company’s lenders themselves are being asked to waive their legal claims should Valeant not file their accounting statements in time. Nevertheless, a failure to make a timely filing could still crimp the value of VRX shares as the SEC as well as the New York Stock Exchange enforce their own rules associated with quarterly report requirements.
Whatever the case, the preemptive legal wrangling just looks bad, and it sent VRX lower by more than 6% on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
