Investors weren’t quite sure what to do with today’s unsurprising news of a rate-hike. Despite a disappointing retail sales report for May and clearly waning inflationary pressure, the Federal Reserve is still moving full steam ahead with its rate-hike plans based on a rather optimistic outlook. Traders initially responded bullishly to the report, but having had time to chew on it, they changed their mind. By the time the closing bell rang, the S&P 500 was back to 2,437.92, down 0.10%.
Here’s a look at why these three names led the bearish charge.
National-Oilwell Varco, Inc. (NOV)
Most oil stocks were down in a big way on Wednesday, along with oil prices. Crude values fell nearly 4%, undermining names like Anadarko Petroleum Corporation (NYSE:APC) and Devon Energy Corp (NYSE:DVN). The former fell nearly 4%, while the latter was off 3.9%. It was National-Oilwell Varco that led the way lower, though, with NOV losing nearly 5% of its value by the time the dust settled.
The setbacks mostly stemmed from last week’s drawdown in the nation’s crude stockpiles. After rising unexpectedly a week earlier, the figure resumed a downtrend last week. It just didn’t fall enough. Levels of stored oil fell by 1.7 million barrels, but analysts were looking for a bigger decline.
Fanning the bearish flames that burned NOV and its peers was report from the IEA suggesting the oil glut wasn’t going to wither away as previously expected. It could remain problematic for oil prices though 2018.
Hawaiian Holdings, Inc. (HA)
What’s exciting news for United Continental Holdings Inc (NYSE:UAL) and its shareholders was anything but exciting for Hawaiian Holdings and HA investors. The bigger of the two airlines announced today it was adding flights to and from Hawaii, taking dead aim at Hawaiian Holdings’ bread-and-butter business.
The specifics: United is adding services on 11 different routes between the continental United States and Hawaii, making it the most prolific carrier over that stretch of the ocean.
While the news was alarming, the crux of the 10.5% pullback HA shares dished out today may have been the result of a downgrade from Stifel Nicolaus. The firm lowered its stance on Hawaiian Holdings to a “Sell,” simultaneously lowering its target price on HA stock from $60 to $40 per share.
United States Steel Corporation (X)
Last but not least, HA wasn’t the only name to suffer from analysts’ doubts on Wednesday. United States Steel was also on the receiving end of a professional stock-picker’s warning, dragging X shares down 5.5% for the day.
Gordon Johnson, senior analyst with Axiom, did the deed, suggesting the company was very likely to cut its guidance for the full year sometime in July or August. All told, Johnson believes the steel company will lower its full-year profit outlook on the order of 28%. He explained of his warning:
“While, admittedly, there are thousands of moving parts in X’s model, and our approach neglects to address X’s US Steel Europe (“USSE”) and Tubular segments, we believe the accuracy in our approach rests with the fact that, in general, when US steel prices are falling, trends in the energy segment (i.e., Tubular) as well as Europe (i.e., USSE) are also losing ground.”
The analyst has a target price of $14 per share on X stock, which is more than 30% lower than Wednesday’s closing price.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.