This Is the Reason the S&P 500 Dove Like a Submarine

All the king's horses and all the king's men may not be able to supply enough stimulus to keep the global economy from a recession again. In a quarterly report released today, the International Monetary Fund noted that the risks for a growth slowdown remained high and lowered its 2012 and 2013 growth forecast to 3.3% and 3.6%, respectively, both 0.2% and 0.3% below its previous forecasts. As my Foolish colleague John Maxfield astutely pointed out earlier today, these figures don't need to be negative to signify a recession according to the IMF's definition of a recession.

Rising oil prices also were a drag on the market, as fears escalated that tension between Turkey and Syria could escalate and disrupt production in the Middle East. Routine maintenance in the North Sea has also been slow to come back online, creating the potential for a supply shortage. Rising oil prices are definitely not a welcome sight for U.S. citizens who are already tightening their wallets.

Add this all up, and unsurprisingly, the S&P 500 (INDEX: ^GSPC  ) had a miserable day, ending down 14.40 points (-0.99%) to 1441.48. Let's look at a few companies responsible for the S&P 500's big move lower.

There was no shortage of losers today, but none felt investors' wrath more than Edwards Lifesciences (NYSE: EW  ) , which fell off a cliff, down 21%. The maker of artificial heart valves warned that austerity measures in Europe and lower insurance reimbursements in the U.S. would cause its third-quarter revenue to slump to $448 million from its previously forecasted range of $465 million to $485 million. Although sales are expected to pick back up in the fourth quarter, my colleague Brian Pacampara made a good point earlier today that even after today's drop, Edwards is still rather pricey at 40 times forward earnings.

Netflix's (Nasdaq: NFLX  ) amazing run over the previous couple of sessions came to a grinding halt today, following a downgrade from a Bank of America analyst to "underperform" from "buy," sending the stock down 11%. The covering analyst warned that Netflix's domestic streaming business could plateau sooner than expected and fully expects that content prices will rise. The potential for rising content costs has long kept me on the sidelines and away from Netflix because Amazon.com (Nasdaq: AMZN  ) appears to have the better cash position to garner more lucrative streaming content deals going forward. Not every Fool agrees with me on this point, but time will tell if I'm correct.

The lone bright spot today happens to once again be the coal sector, which was led by Alpha Natural Resources (NYSE: ANR  ) and its 7%-plus gain. Coal companies are benefiting across the board following the first cold snap of the season, which has investors hopeful that energy usage may soon be on the rise. A steady incline in natural gas prices from below $2 per thousand cubic feet to nearly $3.50 per thousand cubic feet also has coal on more competitive price footing versus natural gas.

A steady stream or a raging river?
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Fool contributor Sean Williams owns shares of Bank of America but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Bank of America, Netflix, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Netflix and Amazon.com, as well as creating a bear put ladder position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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