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Why Freeport-McMoRan, ClubCorp Holdings, and U.S. Steel Slumped Today

By Dan Caplinger - Apr 12, 2017 at 5:05PM

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These stocks led the market lower. Find out why.

The stock market finished lower on Wednesday, and many investors blamed uncertainty about the geopolitical and global macroeconomic situation for the modest declines on Wall Street. Major benchmarks fell as much as half a percent in the wake of diplomatic talks between the U.S. and Russia, and gold prices climbed in light of nervousness hitting most of the rest of the financial markets.

Additionally, some negative news from individual companies also weighed on overall sentiment, and Freeport-McMoRan (FCX -0.16%), ClubCorp Holdings (MYCC), and U.S. Steel (X 1.73%) 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.

Freeport deals with Indonesian tensions

Shares of Freeport-McMoRan finished lower by 5% as investors noted that ongoing difficulties that the copper and gold miner is facing with its key Grasberg mine in Indonesia. For months, the Indonesian government has imposed rules on Freeport that have limited its ability to export copper concentrate, requiring the company to get special licensing and make additional payments to Indonesia. In addition, the Indonesian government is seeking partial divestiture, which Freeport argues is essentially a non-starter. With the mine unable to produce, both Freeport and Indonesia are losing money, and investors don't seem optimistic about calls for ongoing negotiations to resolve the issue. Given the history between Indonesia and Freeport regarding Grasberg, it's unlikely that there will be a permanent resolution anytime soon.

Mining property.

One of Freeport's mining properties. Image source: Freeport-McMoRan.

ClubCorp shies away from a sale

ClubCorp Holdings stock dropped 11% after the golf resort and private club operator gave an update on its review of strategic alternatives. After looking at the potential to sell itself, ClubCorp disclosed that it had not received any solid offers to acquire the company. Instead, ClubCorp CEO Eric Affeldt will retire once a successor is named, and going forward, the company will refocus on growing itself both organically and through its own acquisitions, while still keeping the strategic review committee in place to consider future opportunities. With the private club specialist reporting another net loss for the first quarter and seeing sales growth of only 3%, investors want ClubCorp to enhance the value of its own stock in any way possible.

U.S. Steel deals with a crisis

Finally, shares of U.S. Steel were down 10%. The steelmaker reported that a wastewater spill at a northern Indiana steel plant was caused by a pipe problem, resulting in a chemical linked to cancer leaking into a waterway that leads into Lake Michigan. The EPA is still looking at whether any of the carcinogenic chemical actually made it to the lake. In addition, analysts at Longbow issued a neutral rating on the steel stock, and that matches up with the ambivalence that some investors feel about whether proposed infrastructure spending will actually pan out to a great enough extent to have a marked impact on U.S. Steel's financials going forward. For now, shareholders should continue to expect volatility in U.S. Steel and its steelmaking peers.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper and Gold. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Freeport-McMoRan Inc. Stock Quote
Freeport-McMoRan Inc.
$31.62 (-0.16%) $0.05
United States Steel Corporation Stock Quote
United States Steel Corporation
$25.25 (1.73%) $0.43
ClubCorp Holdings, Inc. Stock Quote
ClubCorp Holdings, Inc.

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