The stock market is still in the nascent stages of adjusting to a new-look Republican-controlled Congress, a shift that last happened under a Democratic president 20 years ago, in 1994.
While this will surely have an effect on business and the economy, the repercussions of the change on Capitol Hill aren’t entirely clear to Wall Street yet.
It certainly isn’t as black-and-white as earnings from Qualcomm (QCOM), Molycorp (MCP) and CBS (CBS), which caused each stock to be a major mover in early trading today.
Qualcomm (QCOM)
As of yesterday’s close, Qualcomm stock was up roughly 4% year-to-date, trailing the S&P 500‘s 9.5% gains in 2014 by a full 5.5 percentage points. It doesn’t look like QCOM stock is going to catch up to the benchmark index anytime soon, either, as shares were off as much as 10% in trading after fiscal fourth quarter results.
Qualcomm is having difficulty growing as fast as it once could; the San Diego-based company is a leading chipmaker for many of the world’s largest smartphone makers, and growth in that segment is slowing. QCOM stock missed analyst estimates on both revenue growth (up 3%) and earnings per share growth (up 20%).
That wasn’t the only thing hammering QCOM stock this morning. The chipmaker sees trouble collecting royalties in China in the upcoming fiscal year, and regulatory probes in the U.S. and U.K. also threaten its business going forward. Tread carefully with Qualcomm stock.
Molycorp (MCP)
Molycorp stock, as of yesterday’s close, had lost a whopping 75% in 2014. Shares of the rare earth miner are biting the dust again in early morning trading, with MCP stock off more than 5%. Unfortunately for shareholders, this is more of the same from MCP, which has plunged from a peak near $75 per share in 2011 to current levels below the $1.50 mark.
The slower smartphone market is hurting both QCOM and MCP, as Molycorp sells much of the rare earth materials it mines for to smartphone makers. Molycorp stock — as well as the underlying business — also lives and dies with the going rate for the obscure materials it sells, and the second quarter saw those commodity prices slump.
With production costs also doubling in the most recent period, MCP is facing some serious headwinds.
CBS (CBS)
Shares of media giant CBS, while down more than 17% this year, tacked on as much as 3% in premarket trading on Thursday. Unfortunately, the gains didn’t last, and CBS stock swung to nearly a 3% loss by late morning. Shares initially rallied after topping Wall Street estimates on both earnings and revenue, with adjusted EPS of 74 cents and revenue of $3.37 billion in the third quarter.
Analysts were calling for EPS of 73 cents on sales of $3.33 billion, so it was a nice — if not decisive — beat for the company. It didn’t hurt CBS stock that the company is embracing streaming video, a forward-looking approach that may force other networks to adapt to its strategy:
“CBS News and CBS Interactive today launched CBSN, the first digital streaming news network that will allow Internet-connected consumers to watch live, anchored news coverage on their connected TV and other devices.”
CEO Les Moonves is on the right track here, and it always pays to be a first-mover in an emerging industry. While Wall Street isn’t rewarding CBS today, I suspect that consumers will applaud the move into streaming.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.
