The stock market did reasonably well on Wednesday, as strong results from the nation's largest tech company sent the Nasdaq Composite in particular to gains of half a percent. More broadly, major market benchmarks were up a bit less sharply, but dovish signs from the Federal Reserve and generally good performance on the earnings front pointed to favorable conditions in the U.S. economy. However, some individual companies didn't fare nearly as well, suffering from bad news that sent their shares down sharply. Cameco (NYSE:CCJ), Manhattan Associates (NASDAQ:MANH), and Rite Aid (NYSE:RAD) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Cameco deals with Japanese rejection
Uranium producer Cameco dropped 12% after the Canadian company received a termination notice from Tokyo Electric Power with respect to its uranium supply contract. The move comes after the shutdown of nuclear reactors across Japan following the Fukushima Daiichi nuclear plant meltdown in 2011, which has dramatically reduced the need for uranium in the island nation. Tokyo Electric used a force majeure clause to justify its move, but Cameco responded by rejecting the termination notice, arguing that the uranium producer instead has a cause of action against Tokyo Electric's default. Cameco reassured shareholders that it has the financial capacity to deal with the potential lost revenue from the incident, but investors aren't nearly as comfortable with the controversy.
Manhattan sees weaker prospects ahead
Manhattan Associates fell 7% following the release of its fourth-quarter financial report. The maker of supply chain management software posted a 4% rise in revenue that pushed its bottom line higher by 13%, with its greatest strength from its home Americas segment. Yet Manhattan's guidance for 2017 included sales growth projections of just 3% to 5%, and adjusted earnings could grow at an even slower 1% to 3% pace compared to 2016 levels. A weak environment in the retail industry is clearly having a downward impact on Manhattan Associates' growth capabilities, but investors still want to see evidence that the company can still squeeze out more attractive gains in its top and bottom lines than it currently expects.
Rite Aid keeps dealing with fallout
Finally, Rite Aid fell another 6%. After having accepted an amended merger agreement with Walgreens Boots Alliance (NASDAQ:WBA) that will dramatically reduce what Rite Aid shareholders receive if the deal is approved, the beleaguered drugstore chain now faces union pressure from a group representing 6,000 Rite Aid workers. According to the union, Rite Aid and Walgreens haven't gone far enough to ensure that the merger as structured meets antitrust issues. What workers fear is that a lack of competition will put workers in a weaker position to respond to what a union representative called "conditions which are conducive to abuse of power." Rite Aid investors apparently believe that with growing dissent about the deal, it's increasingly likely that Walgreens will simply back out or prove unable to get approval from regulators, and that could leave Rite Aid in a difficult situation from a competitive standpoint.