Thursday was another good day for the stock market, as investors carried over their enthusiasm into a second day following the Wednesday afternoon announcement of the latest decision of the Federal Reserve on interest rates. Stable rates sent markets higher yesterday, and gains continued today, although the extent of the move was more modest.
Most major market benchmarks rose between half a percent and 1%, and bullish investors believe that the Fed's choice not to raise rates should bode well for stocks for the rest of the year. Yet some specific investments didn't fare as well, and among the worst performers were Omnova Solutions (OMN), Jabil Circuit (JBL 1.60%), and the iPath S&P 500 VIX Short-Term Futures ETN (VXX).
Omnova falls short on financials
Omnova Solutions dropped 15% in the wake of its fiscal third-quarter results. The maker of engineered surfaces and specialty chemicals said that sales for the quarter dropped 7% from the year-ago period, producing adjusted earnings of $0.14 per share, up $0.01 from last year's fiscal third quarter.
The performance chemicals segment produced volume increases, but the engineered surfaces business suffered from customer delays and poor timing of start-ups in flooring-plant operations that will eventually add to Omnova's overall business. With a great deal of consolidation activity in the industry, Omnova will have to do its best to navigate tough conditions and find ways to support its own growth going forward.
Jabil Circuit deals with downgrades after reporting declining earnings
Jabil Circuit finished down 6% after reporting its fiscal fourth-quarter results Wednesday night. The company said that quarterly revenue came in at $4.4 billion, helping Jabil close a record year in terms of its top-line performance. CEO Mark Mondello was quite pleased with the report, noting that the year "was characterized by a blend of exceptional performance, significant variability, excellent cost control, and wonderful customer care."
Yet some are concerned that, given Jabil's exposure to the coming launch of the iPhone 7, the stock is vulnerable to any disappointment in early sales of the new smartphone. If the phone does better than expected, however, that could presumably put more momentum into Jabil's upward movement.
Volatility takes a hit
Finally, the iPath S&P 500 VIX Short-Term Futures ETN sank 3%. The Fed's move has dampened expectations for volatility, and when that happens, the iPath ETN typically loses ground. Indeed, the drop puts the exchange-traded product very close to an all-time low, and the market has thus far withstood historically downward movements that often occur in the month of September. Without a big downward move in the stock market sometime this fall, the path of least resistance for the iPath ETN is likely to be downward for the foreseeable future.