It was a bit of a struggle for investors to decide if July’s inflation was enough to prod the Federal Reserve into raising interest rates. For that matter, the release of the FOMC minutes for the late-July meeting were only slightly more hawkish than the Fed’s prior comments. When all was said and done though, the S&P 500’s loss of 0.83% on Wednesday implies investors believe a rate hike next month is more likely than not.
It could have been worse, though. You could have owned American Eagle Outfitters (NYSE:AEO), Seagate Technology PLC (NASDAQ:STX) or Marathon Oil Corporation (NYSE:MRO). These three names were hit particularly hard on Wednesday, albeit it for understandable reasons.
Marathon Oil (MRO)
Another bad day for oil prices meant another bad day for energy stocks. This time around it was Marathon Oil leading the bearish charge with a high-volume 7% plunge that pulled MRO to new multi-year lows. But, peers Continental Resources, Inc. (NYSE:CLR) and Canadian Natural Resource Ltd (NYSE:CNQ) weren’t too far behind.
As for oil prices, crude slumped nearly 5% on Wednesday, with near-term WTI futures ending the session around $41 per barrel.
Wednesday’s strong selloff was spurred by yet-another increase in the amount of stockpiled oil. Levels of crude stored in facilities all across the country grew to 456.21 million barrels last week, whereas the market was looking for a drop in stock levels.
MRO shares are now down 60% since their September-2014 peak.
Seagate Technology (STX)
In the long run, Seagate Technology will likely be better off with its acquisition of Dot Hill Systems Corp. (NASDAQ:HILL). In the near-term, though, today’s 5% tumble from STX on the heels of the announcement says shareholders may be less than thrilled with the price Seagate Technology paid for HILL.
All told, Seagate Technology will be paying $9.75 — in cash — per share of Dot Hill Systems to buy the rival storage system maker, valuing the deal at $694 million. That price also catapulted HILL shares 87% higher on Wednesday alone.
The premium Seagate paid looks rich on the surface. But, it may be worth it. Even at a price of $9.75 per share, the buyer only paid a forward-looking P/E of 31 for Dot Hill.
American Eagle Outfitters (AEO)
Last but not least, despite blowing away second-quarter earnings expectations, American Eagle Outfitters shares managed to finish the day deep in the red, down more than 7%.
Last quarter, retailer American Eagle Outfitters earned 17 cents per share on $797 million in sales. Analysts were only looking for a bottom line of 14 cents per share of AEO, and a top line of $762 million. American Eagle also handily topped year-ago earnings of three cents per share and sales of $711 million. Same-store sales grew 11%. The company may have undermined its stellar results, however, by warning that same-store sales growth rates were likely to shrink to single-digit levels in the foreseeable future.
Nomura Securities analyst Simeon Siegel explained of the setback “The company is growing very strongly, and the stock has already priced that in.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
