Today’s 3 Worst Stocks in the S&P 500

From steel to iron ore to chemicals, the materials sector was toxic in the stock market today

Feb 24, 2014 at 7:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market was full of optimism today, as seven out of 10 sectors, and six out of 10 individual stocks, locked in gains. Unfortunately for the worst performers in the stock market today, they weren't invited to the ball. Hopefully, one day they'll at least be able to mope by themselves around the punch bowl, but that wasn't in the cards for these three materials companies on Monday. The S&P 500 Index (SNPINDEX:^GSPC), which briefly hit all-time highs in today's session, finished up 11 points, or 0.6%, to end at 1,847.

Shares of United States Steel (NYSE:X) ended at the depths of the S&P today, shedding 3.4% in trading. Unlike retailers or tech companies that have the freedom to innovate and differentiate their products from competitors, U.S. Steel is chained to a commoditized product, steel, which means its customers have little more than price to consider when choosing where to buy from. Right now, U.S. Steel, and domestic steel producers, in general, are in a tough spot, because Chinese steel is far cheaper. That price discrepancy -- which sat at nearly $160 a ton last month -- became even more dramatic today as Chinese media reported a slowdown in real estate-related lending, which should curb demand for steel, and send prices even lower.

Agriculture and chemicals behemoth Monsanto (NYSE:MON) also saw its stock wilt today, losing 3.1%. Monsanto has found itself in the crosshairs of organic food enthusiasts in recent years, as the pioneer in genetically modified organisms, or GMOs, strong-armed its way to agricultural ubiquity. While Monsanto can go to court with farmers all day long about genetic seed disputes, it's far more difficult to hold sway with entire nations, given the degree of international backlash over GMOs.

Lastly, Cliffs Natural Resources' (NYSE:CLF) stock fell 2.9% today as the coal and iron ore producer felt the unpleasant results of the ripple effect that began with reports of slowing Chinese real estate lending. Although I often blame flap-happy Asian butterflies for bouts of miserable weather in the U.S., linking Cliffs Natural Resources' Monday slump with a news story in China isn't as hard to explain. As mentioned, U.S. Steel suffered on Wall Street today because of a report that China's hitting the brakes on real-estate lending, lowering demand for steel. Thus, since iron ore and coal are vital ingredients in the steel-making process, Cliffs, by extension, will see lower demand for its wares, all things being equal. I'm still working out the math behind my butterfly weather theory, so stay tuned.

Cheaper steel means lower costs: Two automakers to buy for a surging Chinese market
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! Lower steel prices, while a pain for steel and iron ore producers, are a blessing from the heavens for carmakers, which should see costs fall as a result. As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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