With more bad news than good news to kick off the new trading week, the bears took control of the market early, and never let go. By the time the closing bell rang, the S&P 500 was at 2161.20, down 033%.
Monday was much worse than that for owners of KBR, Inc. (NYSE:KBR), Deutsche Bank AG (USA) (NYSE:DB) and Goldcorp Inc. (USA) (NYSE:GG), however. These three names led the bearish charge.
Here’s what happened.
Goldcorp Inc. (USA) (GG)
Not that a 0.24% pullback in the price of gold is devastating. But, when it’s part of a pullback that has shaved 2.2% off of gold’s value since the 21st of last month and leaves gold futures within sight of a major breakdown, it can take a bite of the especially vulnerable gold miners.
That’s what happened to Goldcorp on Monday. GG shares lost 4.8% of their value on what has become alarmingly persistent weakness for gold. GG is now down 22% from its early July high.
Although the current price of gold at $1,313 per ounce is still well above Goldcorp’s all-in sustaining cost of between $850 and $925 per ounce, GG owners may be worried about a combination of higher-than-anticipated expenses and further declines in the value of gold.
Deutsche Bank AG (USA) (DB)
Just when you think it can’t get any worse for Deutsche Bank, it gets worse.
Deutsche Bank saw its stock tumble a tailspin back on Sept. 16. when it was announced it could owe as much as $14 billion worth of penalties imposed by the Department of Justice. Although it said it had no intention of paying that amount (and probably won’t have to), even a fraction of that figure could be debilitating for the capital-strapped bank.
The plan to solve the cash-crunch problem — selling some of its loans — wasn’t especially well-received, as it fixes a near-term problem possibly by creating an even-bigger long-term headwind. And sure enough, it became clear just a few days later that Deutsche Bank may be in bigger trouble than first presumed, as German chancellor Angela Merkel made a point of saying the government wouldn’t be bailing the bank out if its financial situation continued to deteriorate.
Matters got even more complicated today, sending DB back down to the tune of 1% on the heels of news it may be sued for fraud in an Italian court. The claim alleges the bank concealed losses incurred by at least one of its divisions. While 1% isn’t much, on top of a 14% pullback since mid-September, it certainly feels like a lot.
KBR, Inc. (KBR)
Last but not least, for proof that some oil and energy companies may be too far gone to salvage despite crude oil’s 40% rebound rally since early February, look no further than KBR. KBR shares fell more 9.9% today after the company released revised 2016 guidance that showed unexpectedly high increases in the costs of certain projects.
The news actually came out after the close on Friday — KBR now expects full-year operating earnings of between 30 cents and 50 cents per share, down from previous guidance of $1.20 to $1.45 per share of KBR. Analysts had been modeling an average bottom line of $1.30 per share.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
