6 Stocks Dragging the Stock Market Down

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U.S. equities suffer their worst pullback in months on Thursday, with the Dow Jones Industrial Average falling more than 200 points at its lows on worries about tax cut legislation working through Congress.

The latest out of the Senate is that a planned cut to the corporate tax rate to 20% wouldn’t come into effect until 2019. State and local tax deductions would be phased out. And a new tax on corporate offshoring intangible assets suggests the plan, overall, is a little less generous than investors had hoped for.

After months of extreme market sentiment, narrowing breadth, and widespread overvaluations, a pullback was long overdue. It’s here now. With these six stocks leading the way down:

Alcoa (AA)

Alcoa Corp (NYSE:AA) shares are rolling lower, falling steeply out of a three-month consolidation range losing it 50-day moving average in the process.

That takes shares back to levels not seen since late August. Investors are demonstrating a “sell the news” dynamic after the company reported mixed results and strong guidance, which is dependent upon rebounding Chinese aluminum demand and an idling of smelting facilities there — an unlikely combination.

The company will next report earnings on Jan. 17. Analysts are looking for earnings of $1.29 per share on revenues of $3.3 billion. When the company last reported on Oct. 18, earnings of 72 cents per share missed estimates by five cents on a 27.3% rise in revenues.

GoPro (GPRO)

GoPro Inc. (NASDAQ:GPRO) shares have dropped out of a volatile four-month trading range, falling back below its 200-day moving average and returning to levels not seen since early August.

This despite the launch of the Hero 6 camera head of the holiday shopping season as the momentum behind the action camera market has all but fizzled out.

Also contributing is a selling of shares by CEO Nicholas Woodman, which he claims is normal diversification and isn’t related to his “excitement” for the future. Yeah, right.

The company will next report results on February 1 after the close. Analysts are looking for earnings of 45 cents per share on revenues of $479 million.

When the company last reported on Nov. 1, the company reported earnings of 15 cents per share, two cents ahead of estimates, on a 37.1% rise in revenues.

Bank of America (BAC)

Bank of America Corp (NYSE:BAC) shares are down nearly 2% on Thursday, closing their mid-October post-earnings gap move to fall back towards its 50-day moving average.

In addition to net interest margin headwinds, financial stocks are being hit by concerns over tepid consumer credit growth as Americans resist the urge to go crazy with revolving credit like they did during the last cycle.

The company will next report results on Jan. 17 before the bell.

Analyst are looking for earnings of 47 cents per share on revenues of $22 billion. When the company last reported on Oct. 13, earnings of 48 cents per share beat estimates by three cents on a 2.1% rise in revenues.

American Express (AXP)

American Express Co (NYSE:AXP) has dropped off of its high to close in on its 50-day moving average, down more than 4%, threatening to break a three-month uptrend.

Investors have been spooked by a low-quality earnings beat driven by taxes as well as a planned management changeover that is likely to continue a status quo approach and the net interest margin pressure being felt by the entire financial sector.

The company will next report results on Jan. 18 after the close. Analysts are looking for earnings of $1.54 per share on revenues of $8.7 billion. When the company last reported on Oct. 18, earnings of $1.50 beat estimates by two cents on an 8.5% rise in revenues.

United Technologies (UTX)

United Technologies Corporation (NYSE:UTX) UTX shares are breaking sharply lower as investors react to the specifics of the Senate GOP’s tax plan. The move breaks a three-month uptrend pattern and moves in on the 50- and 200-day moving averages.

Watch for a possible move down to the September lows, which would be worth a decline of nearly 8% from current levels.

The company will next report results on Jan. 25 before the bell. Analysts are looking for earnings of $1.56 per share on revenues of $15.4 billion.

When the company last reported on Oct. 24, earnings of $1.73 beat estimates by four cents on a 4.9% rise in revenues.

Snap (SNAP)

Snap Inc (NYSE:SNAP) shares have been under intense selling pressure after the company reported disappointing quarterly results and weaker-than-expected user growth metrics amid a planned redesign of its app and a write-down of stockpiles of Spectacles glasses.

The stock price is moving in on its post-IPO low $11, representing a near 60% decline from its post-IPO high.

The company will next report results on February 1 after the close. Analysts are looking for a loss of 16 cents per share on revenues of $252 million.

Morgan Stanley recently rubbed some salt in the wound, downgrading shares to underweight.

Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.


Article printed from InvestorPlace Media, https://investorplace.com/2017/11/stocks-dragging-the-stock-market-down/.

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