Between solid new-home sales for June, another drop in crude inventories and an unsurprising decision from the Federal Reserve to leave interest rates alone, the path was cleared for another small market gain. The S&P 500 index ended the day up 0.03%, at 2,477.83. The other key indices fared much better though.
Here’s a closer look at what went wrong for each.
Wynn Resorts, Limited (WYNN)
The good news is, casino operator Wynn Resorts was more profitable than anticipated last quarter. The bad news is, tepid foot traffic at its casinos in Macau, China, was very disappointing in the second quarter, sending WYNN shares lower by 5% for the day.
For the accounting period ending in June, Wynn Resorts turned $1.53 billion worth of revenue into an operating profit of $1.18 per share, handily topping estimates for earnings of only $1.09 per share and a top line of $1.45 billion.
A continued turnaround in its Macau business was a key part of the year-over-year growth of both measures. It just wasn’t enough to offset the concern WYNN shareholders now have after hearing that construction all around its casinos there had stifled foot traffic to its Macau locales. The headwind was not quantified, nor was a timeline offered, but the market assumed the worst.
Corning Incorporated (GLW)
Wynn Resorts wasn’t the only name to take a hit despite solid second-quarter numbers. Industrial technology company Corning suffered the same unfair fate.
In its second fiscal quarter of 2017, earned 42 cents per share, topping estimates of only 40 cents per share of GLW. Revenue of $2.59 billion was also stronger than analysts’ projections of $2.51 billion. Nevertheless, GLW ended the day down a hefty 5.3%.
The reason for the weakness isn’t entirely clear, though in light of the 32% gain it had mustered between the end of 2016 and Tuesday’s close, it appears Corning shares were going to be subject to profit-taking no matter what kind of second-quarter numbers it put up … a “sell the news” phenomenon.
Akamai Technologies, Inc. (AKAM)
Last but not least, cloud-computing services provider Akamai Technologies sent its shares a whopping 14.6% lower today after cautioning AKAM shareholders that the quarter currently underway wasn’t going as well as analysts had previously expected.
The recently completed second quarter wasn’t a problem. Akamai earned an operating profit of 62 cents per share versus estimates of only 60 cents, and sales were better than expected too. For the accounting period ending in September though, the company is now only expecting a profit of between 57 and 60 cents per share on revenue of between $604 and $616 million. Analysts were modeling, on average, sales of $619.4 million and earnings of 61 cents per share of AKAM.
Akamai Technologies may be setting up a low-ball target to ensure an impressive beat when the time comes. The extreme bearish action, however, says traders are taking the company at its word.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.