It remains to be seen if the market’s major indices will hold onto today’s gains, but stocks hit multi-year highs on Thursday, largely fueled by am encouraging dose of earnings news. When the dust finally settles today, the S&P 500 ended the session at 2,112.93, up 0.24%.
Not every stock was giving shareholders a reason to celebrate, however. Texas Instruments Incorporated (NASDAQ:TXN), PulteGroup, Inc. (NYSE:PHM) and Alcoa Inc. (NYSE:AA) ended the day uncomfortably deep in the red. Here’s why.
Alcoa (AA)
As if Alcoa hasn’t struggled enough this year as aluminum prices remain near multi-year lows, AA stock fell nearly 3% on Thursday on the heels of news that China was removing a tariff on some aluminum products exported from that country. Specifically, the tariff of 5% to 15% on aluminum rods and strips will no longer be in effect as of the beginning of May.
While the decision will only affect a relatively small piece of the aluminum market, AA investors fear it could be an indication of future loosening of Chinese aluminum exports. If so, an already-excessive supply that’s bogging down global aluminum prices could reach glut-like proportions.
Aluminum prices fell nearly 3% on the news.
PulteGroup (PHM)
Just for the record, most homebuilding stocks were down today — a lot –– following alarming news from the Department of Commerce regarding sales of newly-constructed homes. PulteGroup was down more than any of the major names in the business though, making PHM the poster child for today’s demise.
The catalyst: The U.S. Department of Commerce reported on Thursday morning that in March, new home sales fell to an annualized rate of 481,000 units. The number was well shy of the 510,000 economists were expecting, and considerably weaker than the pace of 543,000 set in February.
Presuming those numbers are a red flag of waning home-buying, the market dumped PHM and its peers in spades. It should be noted, however, that March’s pace of 543,000 was also the highest level since February of 2008 … before the housing market imploded. A lull could have been expected for March.
That detail didn’t help PulteGroup on Thursday, though. PHM stock lost 8%.
Texas Instruments (TXN)
Texas Instruments missed earnings as well as revenue estimates for its first quarter of 2015, and then poured salt in the wound by offering disappointing Q2 guidance. All told, the chipmaker earned 61 cents per share of TXN on $3.15 billion in revenue. Analysts had been calling for a bottom line of 62 cents per share on $3.2 billion in sales.
For the current quarter, Texas Instruments is looking for a top line between $3.12 billion and $3.38 billion, and turning it into a profit of between 60 cents and 70 cents per share of TXN. Analysts has been expecting an average of $3.44 billion in revenue and a profit of 73 cents per share of TXN for the quarter ending in June.
While both Q1 numbers were better than the year-ago comparables, between the shortfall and the disappointing outlook, investors saw Texas Instruments as a liability to shed. Shares lost nearly 7% of their value today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
