Wall Street endured a terrible ending to an awful week, with major benchmarks finishing down around 2% to 2.5% on the day and posting their worst week since 2016. Signs of wage inflation spooked market participants into thinking that the recent increase in interest rates could start to accelerate, and the resulting rise in returns available in the bond market could lead some of those who've had money in stocks to return to the perceived safety of fixed-income investments. In addition, poor earnings results from major companies helped to set a negative tone for the market. Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), and Chevron (NYSE:CVX) were among the worst performers among megacap stocks on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Apple fails to inspire
Shares of Apple lost more than 4% after the company reported its fiscal first-quarter financial report. The iDevice giant celebrated a solid holiday season, posting record levels of sales, but some investors weren't pleased with the fact that demand for the new iPhone X doesn't seem to be as high as initially hoped. Fundamentally, Apple still looks good, with huge amounts of cash at its disposal now that tax reform has rendered it unnecessary to keep money locked up in overseas subsidiaries. Shareholders seemed focused on near-term challenges, but Apple still has plenty of potential ahead of it to generate impressive growth with new initiatives in the future.
Alphabet falls a bit short
Alphabet stock declined 5% in the wake of the release of the company's fourth-quarter financial results. The tech titan announced a 24% rise in revenue that produced solid earnings gains that nevertheless weren't as high as investors had wanted to see. Advertising revenue was strong, but other businesses, such as its handsets and other hardware along with its cloud business, saw even faster growth in sales. Despite the company's fundamental performance, shareholders seemed disappointed by the lack of firm projections for future sales or net income, showing that in a skyrocketing market, even the slightest miss can translate into huge share-price declines.
Chevron earnings look a little less energetic
Finally, shares of Chevron finished down nearly 6%. The integrated oil major got big benefits from the recently passed tax reform law, but the results still didn't live up to what investors wanted to see. CEO Michael Wirth was pleased with how the company performed, noting that the oil giant replaced more than 150% of its produced reserves during the period and made initial shipments from its Gorgon and Wheatstone liquefied natural gas facilities in Australia. Yet some analysts pointed to relatively weak refining results in justifying the declines. Regardless of today's move, if crude oil keeps climbing back, then Chevron should be in position to benefit.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Alphabet (A shares) and Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.