With the odds of a rate hike ramping up a bit again against a backdrop of more disappointing earnings reports and outlooks, the S&P 500 suffered a setback of 0.52%. Yet, the close of 2175.44 was just good enough to hold the index above a key technical support level.
Here’s what went wrong for each.
Barrick Gold Corporation (USA) (ABX)
Goldcorp Inc. (USA) (NYSE:GG), Newmont Mining Corp (NYSE:NEM) and a whole slew of other gold miners were all deep in the red on Wednesday, but none so much as Barrick Gold Corporation. ABX shares were off by a whopping 9.5%, and with its bigger market cap and greater volume, it dished out the most pain to most investors today.
It wasn’t anything gold miners did wrong. The market simply responded to the 1.2% plunge in the price of gold, shedding the likes of ABX and GG early and often, since they’re the names most vulnerable to falling gold prices.
Granted, most of Wednesday’s pullback from ABX and its peers may have been speculative. The U.S. dollar was strengthening heading into this Friday’s speech from Federal Reserve Chairperson Janet Yellen following the Federal Open Market Committee’s Jackson Hole meeting — the market is swinging back to a stance that a rate hike may be more likely than recently assumed.
Even so, the small tumble in gold prices pulled them under a critical level for gold miners, exaggerating the losses booked for GG, ABX and others on the suggestion that things could get even worse very quickly.
Garmin Ltd. (GRMN)
While gold mining stocks littered Wednesday’s lists of worst large-cap performers, a handful of other names snuck their way in there. Consumer electronics maker Garmin was one of those names.
Goldman Sachs did the deed. Although it didn’t alter its target price of $46, it did downgrade GRMN from “Neutral” to “Sell” because of the unlikelihood that Garmin would be able to hold its own in the smartwatch space currently dominated by rivals Fitbit Inc (NYSE:FIT) and Apple Inc. (NASDAQ:AAPL).
Specifically, Goldman Sachs believes Garmin’s 29% growth is sales of its fitness product line last quarter will slow to only 7% growth in the same quarter a year from now.
GRMN ended the day with nearly a 6% loss.
Express, Inc. (EXPR)
Last but not least, apparel retailer Express isn’t going to do anywhere near as well as initially expected this year, and EXPR investors are paying a steep price for the airing of the bad news.
All told, EXPR lost 25.5% of its value today when the company lowered its 2016 profit guidance from a range of $1.41 to $1.54 per share to a range of only $1.00 to $1.14 per share. Weak foot traffic to-date prompted the warning, although last quarter’s sales and earnings miss was also a red flag for a possible contraction of the company’s full-year outlook.
Express CEO David Kornberg commented, “I am disappointed with our second quarter performance as sales and earnings were below our guidance, reflecting challenging store traffic. This was compounded by a lack of clarity across the assortment. We believe we have identified the necessary actions to position Express to regain momentum and we are moving on them.”
EXPR owners believed the first part of his assessment, but weren’t so sure about the turnaround he was discussing.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.