Friday was a mixed day on Wall Street, with major benchmarks posting small moves in either direction to finish out the week. Some market participants pointed to the defeat of the proposed repeal of the Affordable Care Act in the Senate as weighing on sentiment even in the face of economic data showing solid gains in the second quarter of 2017, but earnings season also created substantial volatility among individual stocks. Several well-known companies reported bad news either in their quarterly reports or in other areas of their respective businesses, and Altria Group (MO 0.23%), Western Digital (WDC -3.05%), and Goodyear Tire & Rubber (GT -3.65%) 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.
Altria gets smoked
Shares of Altria Group fell 9.5% after the U.S. Food and Drug Administration announced a new initiative to regulate cigarettes more heavily. The FDA said that it would like to see tobacco companies take steps to reduce the amount of nicotine that is present in traditional cigarettes, with the goal of taking the level down below the threshold for smokers to become addicted. The regulatory agency said that curbing addiction should lead to millions of lives saved over time. As it has done with past FDA efforts, Altria responded the proposal with carefully crafted comments, characterizing the FDA announcement as "an important evolution in the [FDA's] approach to regulating tobacco products and a meaningful step forward in developing a comprehensive regulatory policy that acknowledges the continuum of risk." Shareholders weren't nearly as calm, and stocks across the industry shuddered at the regulatory move.
Western Digital falls despite solid results
Western Digital stock declined nearly 8% even though the data storage specialist reported fairly strong results in its fiscal fourth-quarter financial report. The company said that revenue jumped 39% compared to the year-earlier period, and Western Digital reversed a year-ago loss with a $280 million profit, topping the consensus forecast among those following the stock. Yet some shareholders were unimpressed by the storage company's revenue forecast for the current quarter, and others are nervous about an outstanding legal case with Toshiba concerning the two companies' memory-chip joint venture. Until some of those uncertainties get resolved, investors seemed unwilling to give Western Digital the benefit of the doubt.
Goodyear gets a flat
Finally, shares of Goodyear Tire & Rubber dropped close to 8.5%. The tire maker reported slightly weaker second-quarter financial results than investors had expected, including a 10% drop in tire unit sales volume and a 44% decline in adjusted net income compared to the year-ago quarter. Goodyear pointed to heightened competition in the U.S. and European markets as partial causes for tough conditions, along with volatility in costs of raw materials used to make its products. Even though the company saw favorable trends in automobile-related metrics, weakening consumer replacement demand has posed short-term challenges for Goodyear, even though it remains confident about its longer-term prospects. With new guidance reductions for the full 2017 year, Goodyear investors can only hope that things improve for the tire giant sooner rather than later.