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Why Newmont Mining, Archer-Daniels-Midland, and Molina Healthcare Slumped Today

By Dan Caplinger – Nov 11, 2016 at 1:45PM

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These stocks fell sharply despite Friday's flattish stock market performance. Find out why.

The stock market finished the week Friday on a mixed note, with the Dow and Nasdaq gaining ground even as the S&P 500 fell slightly. The ambiguous results of the day reflected the ongoing effort among investors to predict economic conditions beyond January 20, when the new president-elect will take office. Some stocks performed quite badly, however, and Newmont Mining (NEM 0.37%), Archer-Daniels-Midland (ADM 0.24%), and Molina Healthcare (MOH 0.55%) were among the worst decliners on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Image source: Newmont Mining.

Newmont Mining deals with a plunging gold market

Newmont Mining finished the day down 9%, reflecting further declines in the gold market. Gold bullion prices fell another $32 per ounce Friday, finishing the week at $1,226 per ounce and brining its losses just since early Wednesday morning to nearly $115 per ounce. Even with the drop, Newmont is taking smart steps to shore up its business, with a tender offer to buy back debt helping to improve its balance sheet. Moreover, today's announcement that the first gold from the company's Long Canyon project got poured earlier in the week points to the potential for higher production from Newmont in the future. By having taken dramatic steps to improve efficiency, Newmont expects all-in cash costs for the mine to be between $500 and $600 per ounce, leaving plenty of profit even if gold prices don't behave well in the near future.

ADM deals with political fears

Archer-Daniels-Midland dropped 8% after the food processing specialist received a downgrade from analysts at JPMorgan. Already, the results of the presidential election have led to dramatic uncertainty about the future of relations between the U.S. and the rest of the world, and a stronger U.S. dollar against Latin American currencies could make competing countries in South America more attractive to buyers seeking exports than the U.S. markets that Archer-Daniels-Midland serves. As a result, analysts downgraded the stock to underweight, and as future policy becomes clearer, Archer-Daniels-Midland could remain exposed to even greater risks ahead.

Molina Healthcare feels a bit ill

Finally, Molina Healthcare lost about 6%. The Medicaid-heavy health insurance plan provider has had a tough week, with losses totaling nearly 20% since Tuesday as the future of the Affordable Care Act is under serious threat from the president-elect's imminent policy moves early next year. If new healthcare reform de-emphasizes the role of state Medicaid plans in providing health insurance coverage to Americans, then Molina will have to look closely at its business model to see if it needs to shift away from its focus on government programs and toward greater provision of private healthcare coverage. It's too early to tell exactly what health insurance will look like in 2017 and beyond, but investors in Molina aren't happy with the uncertainty at this point.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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