The slightly-better-than-expected Q2 GDP reading didn’t spook investors into thinking a rate-hike is in the cards sooner than later. With the Brexit overhang in place, there’s little doubt the Federal Reserve is going to be plenty accommodative until further notice.
So, after two very nasty days of selling, the bulls finally started testing the waters again. The S&P 500‘s close of 2,036.09 was 1.78% better than Monday’s closing level, and there’s still some near-term room to run.
Not every stock jumped on board the bullish trading though. Barrick Gold Corporation (USA) (NYSE:ABX), Dow Chemical Co (NYSE:DOW) and The Kroger Co (NYSE:KR) were all left out of the rally, albeit for understandable reasons.
Barrick Gold Corporation (USA) (ABX)
Although gold prices were only down a modest 0.8% on Tuesday, overextended gold mining stocks were largely up-ended. Barrick Gold, for instance, fell more than 2%, dishing out a fair amount of pain to the largest number of gold miner investors in terms of total market cap lost.
ABX was hardly alone though. Smaller players like NovaGold Resources Inc. (USA) (NYSEMKT:NG) and Gold Fields Limited (ADR) (NYSE:GFI) were down roughly 4% when the market realized the post-Brexit unchecked buying of gold mining stocks had gotten a little ahead of itself.
Even with today’s setbacks, stocks like ABX and GFI are still up for the year, and remain in longer-term uptrends.
Dow Chemical Co (DOW)
When it’s all said and done, it will end up saving the company money. For today though, the market saw Dow Chemical as a name to sell shortly after it announced was cutting 2,500 jobs.
News of the layoffs comes just before the merger with Dow Corning, fully consummating a partnership with Corning Incorporated (NYSE:GLW) that had been in place for decades. The deal is projected to save the restructured company $500 million per year, with payrolls at least being part of those cost-cuts. But, all of that upside may already be baked in … and then some. As of today, JPMorgan now rates Dow Chemical as “Neutral” rather than “Overweight.”
Fanning the bearish flames was the possibility that the pairing may raise antitrust issues if it proceeds with plans to also team up with E I Du Pont De Nemours And Co (NYSE:DD).
DOW shares closed down 2% despite the otherwise-bullish day for most commodities, as investors start to doubt the company will be able to get it all done, and done right.
The Kroger Co (KR)
Last but not least, to what extent it will impact the top and bottom line remains to be seen, but investors weren’t optimistic that new food stamp rules wouldn’t be noticed by The Kroger Co, sending KR shares down a couple of percentage points on Tuesday.
At first glance, the new USDA rules would appear to favor bigger chains like Kroger and Wal-Mart Stores, Inc. (NYSE:WMT), in that it requires smaller stores and convenience stores to stock a wider variety of healthier items if they wish to retain access to the business that the agency’s $74 billion program feeds them. Many smaller shops say the new requirements will force them out of the Supplemental Nutrition Assistance Program altogether.
Other grocers and convenience stores, however, may use it as an opportunity to win some business they weren’t winning before, beefing up the selection on their shelves and taking a bite out of Kroger’s business. Likewise, the new rules would still prove to be a bigger burden on The Kroger Co.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
