The market got off to a miserable start on Thursday following alarming economic news, but as the day wore on that setback of as much as 1.1% for the S&P 500, it was whittled down to a loss of only 0.31%. The S&P 500 ended the day at 2,132.55, above many key technical support levels.
Not every name participated in the intraday rebound effort, however. Regions Financial Corp (NYSE:RF), Nokia Corp (ADR) (NYSE:NOK) and Freeport-McMoRan Inc (NYSE:FCX) still managed to end more than a little bit in the red.
Freeport-McMoRan Inc (FCX)
Metal mining and resource name Freeport-McMoRan was the worst of the worst among large-cap stocks today, with FCX leading the bearish charge with a 4.1% setback.
Freeport-McMoRan didn’t do anything wrong per-se, however. Rather, it was in the wrong place at the wrong time by being a peer of Rio Tinto plc (ADR) (NYSE:RIO) and BHP Billiton Limited (ADR) (NYSE:BHP) on the same day Citi downgraded both of those names to a “Sell.”
“2016 has been the year of the bulk commodities’, nods Citi Australia Metals & Mining analyst Clarke Wilkins, ‘and both BHP Billiton and Rio Tinto have rallied strongly on the back of higher bulk commodities… but we expect prices to pull back significantly in late-2016 and into 2017 as demand cools and supply responds… China monetary stimulus and supply restrictions have driven a surge in bulk prices in 2016…”
Fanning the bearish flames that burned FCX on Thursday were reports that China’s imports fell in September, suggesting waning demand for industrial metals.
Nokia Corp (ADR) (NOK)
Finnish telecommunication framework provider Nokia may have sidestepped some of the problems industry peer Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) did last quarter. But, considering how much trouble Sweden’s Ericsson appears to be in as of yesterday, that’s not saying much.
Its relative performance to its nearby competitor (albeit indirectly) certainly wasn’t enough to prevent Goldman Sachs from taking NOK off of its ‘Conviction Buy’ list on Thursday anyway. Goldman specifically noted that declines in capital spending within the wireless sector posted a threat to Nokia.
It wasn’t all bad news, however. Canaccord Genuity analyst reiterated the firm’s “Buy” rating on NOK, though he did lower his price target from $7 to $6, chipping into the selling effort.
NOK ended the session down 3%.
Regions Financial Corp (RF)
Last but not least, Regions Financial and a whole slew of other banks — including First Republic Bank (NYSE:FRC) and Citizens Financial Group Inc (NYSE:CFG) — were deep in the red today. FRC was the biggest loser, with a 4.8% decline. In terms of total market cap lost and the degree of damage done to the largest number of shareholders though, the 2.8% setback dished out by RF makes it the worst of the worst among the banks for Thursday.
The prod for the pullbacks was a sharp reversal in the direction interest rates were traveling. They had been inching higher, and continued to do so even after the minutes from the most recent Federal Open Market Committee meeting were released on Wednesday. Having had a night to sleep on it though — and with a little help from overseas news — U.S. interest rates tumbled today.
Falling interest rates present a problem for banks, as lower rates tend to put pressure on profit margins. RF had been rising since early July in anticipation of rising interest rates.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.