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What Happened in the Stock Market Today

By Demitri Kalogeropoulos - Mar 27, 2017 at 4:41PM

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Sealed Air and Cal-Maine Foods stocks stood out as indexes fell.

Stocks opened lower on Monday but gained ground through the session to close with just slight declines. Both the Dow Jones Industrial Average (^DJI 2.68%) and the S&P 500 (^GSPC 3.06%) indexes finished lower by less than 0.25% despite being down by 1% at one point.

Today's stock market

Index

Percentage Change

Point Change

Dow

(0.22%)

(45.74)

S&P 500

(0.10%)

(2.39)

Data source: Yahoo! Finance.

Financial stocks trailed the broader market, which sent the popular Financial Select Sector SPDR ETF (XLF 3.69%) down by 0.4%. On the other hand, an uptick in gold prices helped push the bullish bet on the precious metal, Direxion Daily Gold Miners Jr Bull 3X ETF (JNUG 7.09%), 6% higher.

Outside the stock exchange in New York.

Image source: Getty Images.

Sealed Air (SEE 3.33%) and Cal-Maine Foods (CALM 2.06%) were a few of the individual stocks that attracted the greatest investor interest on Monday.

Sealed Air's $3.2 billion deal

Sealed Air stock dropped 2.5% on heavy trading volume after the company announced a deal to raise cash by parting with a big chunk of its business. The food packaging specialist agreed to give its professional cleaning segment, Diversey, and the related food hygiene and cleaning business, to Bain Capital for $3.2 billion.

The move wasn't exactly a surprise, since Sealed Air's management team has been talking about exiting its Diversey business for months. Yet the price it settled on might be a disappointment to some shareholders. After all, it will receive just 1.2 times the segment's 2016 revenue and book a large paper loss considering it purchased the business for $4.3 billion in 2011.

Sealed Air still believes this is the right move for the company even if it will lower the company's sales base by almost 40%. The divestiture marks a "significant milestone in Sealed Air's transformation," executives explained in a press release. Sealed Air plans to direct most of the $2.5 billion in net proceeds toward paying down debt that, as of the end of 2016, was $4 billion. A smaller piece of the windfall will go toward stock repurchases and growth initiatives, potentially including acquisitions that management thinks will better complement its core food care and product care business than Diversey did.

Cal-Maine's cage-free future

Shares of egg producer Cal-Maine dropped in early trading but ended with a slight gain after the company announced results for its fiscal third quarter. Sales slumped by 32% as the company endured historically weak industry conditions brought on by the combination of surging egg supply and falling demand from its biggest commercial customers. This imbalance drove a 28% decline in average selling prices for its products. Net income, as a result, dove to $4 million from $64 million in the year-ago period.

Commercial egg production.

Image source: Cal-Maine.

"The egg markets have remained under pressure," CEO Dolph Baker said in a press release, "and we do not expect to see any meaningful improvement until there is a better balance of supply and demand."

It wasn't all bad news in this report, though. Cal-Maine's specialty egg division, which includes cage-free eggs, only saw its average prices drop 5% compared to a 28% dive for the non-specialty egg segment. Building up that steadier, more profitable division is a core growth strategy for the company going forward. It accounts for just under one-quarter of sales volume today, but should grow in importance as more restaurants and major retailers move toward using exclusively cage-free eggs in their food preparation. Shifting its huge production base toward these products will be a challenge for Cal-Maine, but it could make the company significantly more profitable over time.

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Stocks Mentioned

Cal-Maine Foods, Inc. Stock Quote
Cal-Maine Foods, Inc.
CALM
$49.42 (2.06%) $1.00
Sealed Air Corporation Stock Quote
Sealed Air Corporation
SEE
$59.65 (3.33%) $1.92
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,500.68 (2.68%) $823.32
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,911.74 (3.06%) $116.01
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund
XLF
$32.34 (3.69%) $1.15
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares Stock Quote
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares
JNUG
$41.52 (7.09%) $2.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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