Image: Chesapeake Energy.
Thursday's stock market performance continued the trend seen earlier in the week, with major market benchmarks remaining close to unchanged after large gains yesterday. Yet unlike in recent days, there were clear winning and losing sectors on the day, and among the unlucky stocks in the losing group were Chesapeake Energy (CHKA.Q), Tenet Healthcare (THC 2.32%), and JinkoSolar (JKS -0.46%).
Chesapeake Energy fell 10% as investors in both the stock and bond markets continued to lose confidence in the energy company due to continued weakness in crude oil and natural gas prices. Several of Chesapeake's short-maturity bonds fell by double-digit percentages on Thursday, and investors in the credit-default swap market saw prices on five-year swaps rise to 53.5%, suggesting a substantial likelihood that Chesapeake won't be able to meet all of its debt obligations in the future.
Chesapeake is far from the only energy stock to suffer from falling oil and gas prices, and the massive impairment charges that have resulted from those declines. Yet with analysts pointing to already substantial debt levels, and the possibility of drawing another $4 billion on a secured credit facility, Chesapeake's status as a junk-rated borrower is making many investors think twice before buying its stock.
Tenet Healthcare dropped 8% on a terrible day throughout the healthcare industry. The entire sector took a big hit when a major player in the health insurance industry said that it would consider bowing out of the Obamacare insurance exchange market, citing an inability to earn a profit under current conditions.
Tenet and other hospital stocks have seen big long-term increases in their stock prices with the evolution of Obamacare, as having fewer uninsured patients has led many to believe that hospitals would suffer fewer losses from healthcare charges they would eventually have to write off. If Obamacare begins to fail, then returning to former conditions would undo some of the benefits for Tenet. Moreover, Tenet and some of its peers have seen weaker admissions growth as the rush following Obamacare's adoption has slowed.
Finally, JinkoSolar fell almost 10% after the Chinese solar company announced its latest quarterly results. The solar specialist saw revenue rise 58%, to $637.6 million, and adjusted earnings of $1.28 per share was about a fifth higher than the consensus forecast among those following JinkoSolar. CEO Kangping Chen was pleased with JinkoSolar's results and predicted continued growth into the coming quarter and beyond.
But even with solid results and an upgrade on third-party solar-module shipments to an expected volume of 3.8 to 4 gigawatts, JinkoSolar traders instead appeared to focus on the potential macroeconomic impact of low fossil-fuel prices on the solar industry more broadly. Fallout in the Chinese solar industry is still likely, but JinkoSolar could easily emerge as a winner among surviving solar stocks in a post-consolidation environment.
