It may not be the end of the world as the Mayans predicted, but investors sure acted like the end of the recovery as we know it was about to occur thanks to a new round of bickering and very little action from Congress regarding the fiscal cliff. House Speaker John Boehner's "Plan B" failed to unite Republicans and didn't even make it to vote, quelling a week's worth of work and optimism that a deal could be around the corner.
To end the week, the broad-based S&P 500 (^GSPC -0.42%) fell 13.54 points (-0.94%), a significant improvement over where it traded this morning, to finish at 1,430.15.
Today was particularly tough for commodity-based tech suppliers like memory company Micron Technology (MU -4.30%) and solar panel maker First Solar (FSLR 1.53%) which fell 6.9% and 4.1%.
Micron's losses stemmed from its first-quarter earnings results, which showed a loss that was much wider than expected. For the quarter, Micron lost $0.27 on $1.83 billion in sales, whereas the consensus figure stood at a loss of $0.20 on $2 billion in sales. Driving sales lower was an 11% drop in computer-memory chip prices and weakened PC sales. Although things may seem dire now, I expect a rebound in PC sales in 2013 and consider Micron to be an intriguing value here.
First Solar, on the other hand, has had an incredible run from its lows even as prices in the sector remain depressed and supply levels remain higher than many in the industry would like. A no-deal for the fiscal cliff debate could hit solar panel producers particularly hard, as they rely on subsidies and enterprise orders to drive the bulk of their business.
However, even in a sea of red, a few green shoots could be found.
Global footwear and accessories company Nike (NKE -0.47%) swooshed past the Street's estimates in the second-quarter on its way to a 6.2% daily gain. Nike's quarterly EPS of $1.14 crushed estimates calling for just $1 as sales in North America spiked 17% and emerging market growth added to its bottom-line gains. Asia continued to be a weak link in Nike's chain, but the footwear giant still looks poised for long-term success.
Software company Red Hat (RHT) also caught fire after reporting better than-expected third-quarter results and ended the day higher by 4.5%. Although EPS simply met expectations at $0.29 for the quarter, revenue growth of 18% to $343.6 million handily slid past projections calling for $338 million. Red Hat's recurring revenue is a big reason it's able to consistently produce year-in and year-out and is also the reason I pinpointed Red Hat's CEO, Jim Whitehurst, as truly an exceptional leader.
