It could have been worse, and for a while, it was. After slipping to a low of 2159.01 on Tuesday — an intraday loss of 0.36% — the S&P 500 clawed its way back to a loss of only 0.14% for the day, closing at 2163.78. Still, the bulls are on the defensive, with a lower low and lower high being logged on Tuesday.
Such a small loss was enviable to owners of Humana Inc (NYSE:HUM), Netflix, Inc. (NASDAQ:NFLX) and Vale SA (ADR) (NYSE:VALE), who watched those stocks dip much deeper into the red ink.
Here’s the deal.
Humana Inc (HUM)
Most of the major health insurers were down today. Anthem Inc (NYSE:ANTM) fell 2%. Aetna Inc (NYSE:AET) fell nearly 3%. Cigna Corporation (NYSE:CI) was off 2% as well. None of them lost quite as much ground as Humana shares did, however. HUM ended the day down nearly 4%.
The selloff was incited by news that may quell the dreams of all four insurers. That is, after mulling it over for a while, the Department of Justice has decided to sue to block the planned acquisition of Humana buy Aetna, as well as the planned acquisition of Cigna by Anthem.
Unsurprisingly, the DoJ justified the move by explaining fewer health insurers would likely lead to higher premiums for consumers. Insurers, of course, are arguing the mandates of the Affordable Care Act make it tough to remain profitable.
Netflix, Inc. (NFLX)
The fiscal portion of Monday evening’s Q2 report from Netflix wasn’t bad. Operational income grew from 6 cents per share to 9 cents per share, and revenue grew 28% on the heels of strong overseas expansion. It wasn’t enough to sidestep a 13% stumble from NFLX shares, however, once investors digested just how disappointing the company’s subscriber growth was.
All told last quarter, Netflix added only 1.7 million subscribers (net), versus Netflix’s prior guidance of 2.5 million, and the market’s expectation of 2.1 million more members than the outfit reported at the end of Q1. Although a miss of 800,000 or even just 400,000 (if using the market’s goal) isn’t a huge number, the shortfall has been interpreted as a sign that Netflix’s best biggest growth is in the past.
Vale SA (ADR) (VALE)
Last but not least, shares of Brazilian iron ore outfit Vale lost 4.4% of their value on Tuesday, though little of it was the company’s fault. It was the victim of a couple outside factors, and was powerless to defend against them.
One of them was the surging U.S. dollar. The U.S. Dollar Index jumped 0.54% today (which is a lot for currency), largely fueled by a plunge in the value of the Australian dollar. In that most commodities — including iron — are often priced in U.S. dollars, they all plunged in response to the greenback’s rise. Lower iron prices means less revenue for Vale.
The other reason VALE shares were torpedoed on Tuesday stems from Monday evening’s quarterly report from Rio Tinto plc (ADR) (NYSE:RIO). While the numbers were superficially good, total shipments or iron didn’t quite live up to expectations. If Rio is coming up short, Vale may be too.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
