Image source: Getty Images.
Stocks posted moderate losses on Tuesday as the Dow Jones Industrial Average (^DJI 0.55%) and the S&P 500 (^GSPC 1.22%) indexes both finished about 0.5% lower.
Today's stock market:
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
(0.47) |
(85.40) |
|
S&P 500 |
(0.5%) |
(10.72) |
Data source: Yahoo! Finance.
A slump in gold prices produced a rough day for several exchange-traded funds. Precious metal fell 3% to below $1,300 a troy ounce on Tuesday for its biggest daily loss since late 2013. That weakness helped push VanEck Vectors Gold Miners ETF (GDX 0.69%) to a 9% drop on the day, while the heavily leveraged Direxion Daily Gold Miners Bull ETF (NUGT 1.55%) tanked by 26%.
As for individual stocks, Seadrill (SDRL) and Darden Restaurants (DRI 0.05%) both made notable moves on Tuesday.
Seadrill's debt rumors
Seadrill shares soared 21% higher on reports that the offshore drilling specialist might soon receive a much-needed cash infusion. The company's largest shareholder, John Fredriksen, is working with a number of banks to put together a proposed loan of as much as $1.2 billion, according to Bloomberg. That sum would take care of roughly half of the $2.4 billion Seadrill last reported as debt it needs to pay back within in the next 12 months. In addition to that current portion, the company also has nearly $8 billion in long-term loans on the books.
Image source: Getty Images.
A new nine-figure loan would come at a good time for Seadrill, whose revenue slumped by 24% last quarter thanks to sharply lower rig demand. Net income for the past six months was just $364 million -- or 58% below last year's results. The company's cash position is improving, and it last ticked up by $200 million to $1.3 billion. Yet asset sales and headcount reduction can only get the company so far, so a bigger cash cushion would help it navigate the current operating slump.
For its part, Seadrill wouldn't confirm or deny the rumors, saying only that the company "remains in discussions with its stakeholders regarding its refinancing and recapitalization." There are "no material developments to disclose," the company added, so investors will have to wait and see if this latest debt rumor pans out.
Darden Restaurant's spiking profits
Olive Garden owner Darden Restaurants gained as much as 5% in early trading before settling down to a 1% increase following its quarterly earnings report. Sales ticked up by 2% to meet consensus estimates. Yet the restaurant operator posted a 40% jump in profits to $0.88 per share, beating analyst targets by $0.06 per share.
"We continued to gain market share and our same-restaurant sales growth outperformed the industry by a considerable margin," CEO Gene Lee said in a press release. Yes, comparable-store sales rose by a market-beating 2% at Olive Garden and by 1% at LongHorn SteakHouse, putting the company squarely within management's forecast. A closer look at the results reveal some worrying trends, though. Customer traffic, for example, declined by 1% in both restaurant chains.
The good news for investors is that higher menu prices and an improved mix of diner orders completely offset that traffic loss. Meanwhile, Darden believes it can continue growing at its current steady pace while generating significantly higher profits. Executives raised their earnings outlook to $3.92 per share from the prior $3.85 per share target. Given the weak operating conditions in its industry, investors counted that as a modest win and pushed shares slightly higher on Tuesday.
