The stock market took a hit today as investors fretted over news that a major player in Portugal's banking system could be in trouble. The fear is that a banking crisis in Portugal could cause contagion in Europe, which, in turn, would affect global markets. Most stocks gradually recovered throughout the day from morning lows, but shares of Cliffs Natural Resources (NYSE:CLF), Best Buy (NYSE:BBY), and Under Armour (NYSE:UA) each posted steep losses nonetheless. The S&P 500 Index (SNPINDEX:^GSPC) lost eight points, or 0.4%, to end at 1,964.
Iron ore and coal producer Cliffs Natural Resources sank 4.8% today, finishing as the worst performer in the entire S&P 500. Longtime shareholders are probably familiar with Casablanca Capital, a firm that owns more than 5% of Cliffs Natural Resources stock. Casablanca is, perhaps, the very definition of an activist investor, lobbying fiercely for a shakeup in a management team it says is destroying the company. Casablanca released a note to shareholders today calling for the ouster of six of the company's directors at the annual shareholders meeting later this month.
The fears from across the pond in Europe sparked many investors to take a good look at their asset allocations, and shift money to safe havens like gold and treasuries. This wasn't good for investors in high-growth names or turnaround stories. Best Buy shares fall into the latter category, and the stock tumbled 3.2% today as it fell out of favor with more conservative investors. While my colleague Timothy Green pointed out several days ago that the electronics retailer wisely divested from its European operations last year, he suggests that Best Buy should continue selling off its international businesses in China and, perhaps, even Canada.
Lastly, shares of Under Armour shed 2.9% today, as investors shied away from the sports apparel retailer in favor of less-expensive stocks. Under Armour trades at 75 times earnings today, quite a multiple for a company whose profit growth has been decelerating for the last four years. While Under Armour is certainly more exciting than its much larger rival Nike, it may take decades for the company to reach Nike's level of dominance in the footwear market -- if it ever gets there.
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