Friday was a down day for the stock market, which responded to the latest economic news on the jobs front. The monthly release from the Labor Department said that nonfarm payrolls rose by 156,000 during September, which was slightly less than most economists had expected to see. Some might have seen that as a positive indicator that monetary policy from the Federal Reserve might remain looser for longer, but a rise in average wages and hours worked led many to believe that the Fed is on track to hike rates as early as December. Major market benchmarks fell as much as a third of a percent, but some stocks posted much more significant declines. Among the worst performers were PPG Industries (NYSE:PPG), Tyson Foods (NYSE:TSN), and SunPower (NASDAQ:SPWR).
PPG expects earnings in the red
PPG Industries fell 8% after the paint and coatings specialist warned that it expects its third-quarter financial results to include a loss. The company said that the loss will result from previously disclosed pension settlement charges, but even after taking those charges into consideration, adjusted earnings from continuing operations of $1.54 to $1.57 per share will represent at best a 2% gain from the year-ago quarter. CEO Michael McGarry said that while global volume growth improved, "we are disappointed with this quarter's EPS growth rate as we continue to operate in a sluggish economic environment with no clear near-term catalyst for improving global GDP growth." Until conditions pick up, PPG could remain under pressure for the foreseeable future.
Tyson deals with lawsuit fears
Tyson Foods slid 9% after a stock analyst commented negatively on the potential impact of a class action lawsuit against it and several other players in the chicken market. The lawsuit alleges that Tyson and industry peers colluded to reduce supplies of chickens, using data collection services from a third-party provider to help each company see what the others were doing. Although the stock analyst had positive comments about Tyson's management team, his concerns are that the fact pattern of rising margins during the period makes the lawsuit compelling on its face. The potential for overhanging legal liability is a problem, but the stock drop seems to reflect the belief that Tyson might lose some key advantage it might have had to help drive its success in recent years.
SunPower draws SEC notice
Finally, SunPower fell 6%. The solar company and its joint venture partner First Solar (NASDAQ:FSLR) reportedly received a notice letter from the Securities and Exchange Commission, indicating that the 8Point3 Energy venture had allegedly improperly interpreted SEC guidelines regarding how to use financial metrics that follow adjusted accounting rules rather than GAAP standards. Given the general lackluster performance of solar stocks over the past year, the last thing that SunPower, First Solar, and the 8Point3 joint venture need is SEC scrutiny in connection with raising capital through a public offering to investors, and that appears to be part of the reason why both SunPower and First Solar lost ground today.