With echoes of a surprisingly strong June jobs report ringing all throughout the day, stocks managed to reverse Thursday’s selloff and hammer out a solid gain. By the time the closing bell rang on Friday, the S&P 500 was at 2,425.18, up 0.64%.
It wasn’t a day for all investors to celebrate though. RH (NYSE:RH), Devon Energy Corp (NYSE:DVN) and Canon Inc (ADR) (NYSE:CAJ) shareholders are all starting the weekend in a bad mood, but for good reason.
Canon Inc (ADR) (CAJ)
Once-iconic camera and photocopier company Canon extended what’s now become a month-long pullback on Friday, with CAJ shares losing another 2.8% of their value following news that the E.U. is mulling a rather stiff fine.
The European Union’s commerce watchdog is suggesting that Canon may have violated merger and acquisition rules in the way it acquired a medical unit from Toshiba. Rather than proposing the deal and then waiting for regulatory approval, it appears Canon spurred another company to make the purchase and merely hold onto the unit in question until the company had received the green light from the EU. The illegal financial maneuver, called “warehousing,” effectively serves as an acquisition, even if not one in the complete legal sense.
It wasn’t the potential fine itself that spooked CAJ owners, but rather, the potential size of it. The EU could penalize Canon as much as 10% of the company’s annual revenue.
Devon Energy Corp (DVN)
Another bad day for crude oil prices meant another bad day for most energy stocks. Continental Resources, Inc. (NYSE:CLR) and Hess Corp. (NYSE:HES) each used more than their fair share of red ink today, but it was DVN that dished out the most damage with its 2.1% stumble.
Oil’s 2.8% setback was spurred by reports suggesting the global glut wasn’t abating. Fresh data says U.S. output and the number of active rigs was up last week, while OPEC is now exporting more crude than it has all year long. Specifically, June’s OPEC exports were higher than June-2016’s total by 2 million barrels per day. Meanwhile, the United States is exporting more than one million barrels per day … a record.
The lower the price of oil, the less profitable it is to be in the business.
Finally, RH — you know it better as the company formerly called Restoration Hardware — didn’t do anything wrong today. It’s just that shareholders couldn’t pass up a sweet profit-taking opportunity headed into the weekend.
Following a very rough 2016 that more than cut the stock in half, hope for a better future drove RH stock higher to the tune of 119% between the end of last year and Thursday’s close.
As it turns out though, it may have been a little too much, too fast. Although there was no news to serve as a catalyst, RH fell 7.4% on the last trading day of this week. Volume was above average too. Thing is, with a triple-digit gain still on the table in just a few months, there may be more downside in store for this company that has yet to prove its on a completely solid-footing.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.