The stock market paused in its upward trajectory on Tuesday, which was a bit surprising in light of a favorable vote on the tax reform bill in the House of Representatives. Major benchmarks were generally lower, although losses were measured. Some investors pointed to the tendency of the market to climb in anticipation of good news only to sell off when the good news actually happens. Yet some stocks saw more precipitous declines. McDermott International (NYSE:MDR), Chicago Bridge & Iron (NYSE:CBI), and Novavax (NASDAQ:NVAX) 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.
Nobody seems to like this merger
Shares of McDermott International and Chicago Bridge & Iron both fell after the two companies announced that they had agreed to a merger. McDermott dropped 12% in the wake of its all-stock offer, which would result in Chicago Bridge shareholders receiving about 247 shares of McDermott stock for every 100 shares of Chicago Bridge they own. It's fairly common for the acquirer in an all-stock deal to see its shares drop as investors take measures to lock in profits, but typically, shares of the target company will go up.
Yet Chicago Bridge shares also fell, losing nearly 11%. The few bullish analysts recommending the stock said that there was no longer any reason to hold onto Chicago Bridge shares in light of the merger, leaving investors worried that Chicago Bridge's energy construction business will continue to struggle regardless of whether it merges with McDermott. Given the challenges in the energy infrastructure market, it's possible that both McDermott and Chicago Bridge could continue to lose ground even if the merger goes through.
Novavax stumbles on lack of positive vaccine news
Finally, Novavax stock plunged 27%. The biotech company gave investors relatively little information in clinical updates on two key vaccines, including one intended to target respiratory syncytial virus in pregnant women as well as its NanoFlu candidate vaccine. There was nothing in the updates that was particularly negative, but investors were hoping for a more positive report that might lift the stock price. With shares flirting with the $1 mark, Novavax is feeling pressure to deliver good news to shareholders in the near future in order to avoid a potential delisting.