Stocks managed to log another daily gain, though just barely. On a day loaded with plenty more political turmoil, the S&P 500 eked out a 0.14% gain to end the session at 2,468.11. The advance materialized despite a lackluster print on June’s housing starts and building permits.
A small gain still would have been better than the results Hertz Global Holdings, Inc (NYSE:HTZ), Transocean LTD (NYSE:RIG) and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) achieved on Wednesday, however. These three names were the worst of the worst.
Here’s what traders need to know about each setback.
Teva Pharmaceutical Industries Ltd (ADR) (TEVA)
Just when it looked as if Teva Pharmaceutical shares were going to turn things around and start to claw their way higher again — after getting thumped following a miserable quarterly report — the rug gets pulled out from underneath it. TEVA stock fell 2.7% on Wednesday, moving back within easy reach of new multi-year lows hit last week.
The prod for the pullback isn’t clear, or singular. For many, the recent stabilization of shares may well serve be an opportunity to sell their TEVA stock they wish they had sold in July. For others, fear surfaced following reports that Teva would be seeking drug development partners, implying things are not going all that well internally for the company right now.
Transocean LTD (RIG)
Most oil stocks were down today, in step with crude’s decline. Oil prices fell 1.4% on Wednesday, despite news that the nation’s crude stockpile continued to edge lower last week … just not as much as expected. Underscoring that concern was data showing an increase in last week’s total production levels.
That dynamic certainly didn’t help Transocean, but RIG shares were further weighed down by the news that it would be shelling out $3.4 billion to acquire Norwegian driller Songa Offshore. While some like the pairing, analysts with Seaport Global Securities think Transocean LTD overpaid for Songa.
RIG ended the day with a loss of 4.2%.
Hertz Global Holdings, Inc (HTZ)
Last but not least, after rallying more than 40% since Aug. 8th’s release of a surprisingly strong Q2 results, shares of car-rental company Hertz Global Holdings fell 6.4% today after investors finally decided enough was enough — it was time to take some profits.
Those traders had some help, mind you. Diamond Hill Investment Group analyst John McClain understandably feels Hertz isn’t nearly as liquid as it’s making itself out to be; the company’s already burned through nearly $6 billion this year alone, and has lost money in five of the past six quarters. As McClain put it:
“They’ll say they were just being prudent, but historically when a company draws on the revolver, it signifies issues. We didn’t get a lot of clarity from management other than, ‘Well, we don’t need it.’ Well, then, why’d you draw it?”
McClain went on to say:
“I bet they’ll negotiate with banks, probably reduce their revolver by another couple hundred million, use proceeds from the second-lien debt to pay that, and use the revolver to kick the can down the road. But then that all sets them up again for facing a 2019 pressing maturity.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. Follow him on Twitter, at @jbrumley.