Stocks fell on high volume and volatility on Monday, with the Dow Jones Industrial Average (DJINDICES:^DJI) experiencing its largest one-day point drop in its history. The S&P 500 (SNPINDEX:^GSPC) also lost more than 4%, giving up all its gains in 2018.
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All sectors fell, but energy and financial shares were particularly hard hit. The Energy Select Sector SPDR ETF (NYSEMKT:XLE) dropped 4.2% and the Financial Select Sector SPDR ETF (NYSEMKT:XLF) closed down 5%.
Weak profit guidance disappoints Arconic investors
Shares of Arconic fell 8.9% after the maker of specialty metal products for aerospace and other industries announced fourth-quarter results that beat expectations, but gave disappointing profit guidance for 2018. Revenue was up 10.2% to $3.27 billion, compared with the analyst consensus of $3.09 billion. Earnings per share adjusted to exclude one-time charges came in at $0.31 compared with $0.12 last year and expectations of $0.24. Arconic lost $1.51 per share when including a charge of $876 million for special items due to some non-cash adjustments and the new tax law.
All business segments reported revenue above guidance, but the company's largest business, engineered products and solutions, reported EBITDA that was 30 basis points less than expected.
Looking forward, Arconic projected 2018 revenue between $13.4 billion and $13.7 billion, above the $13.1 billion analysts were expecting, but EPS of $1.45 to $1.55, below expectations of $1.61. "In 2017, Arconic made progress on growing revenue and profits and taking out cost. However, a significant opportunity for improvement remains," commented CEO Chip Blankenship.
Blankenship just took the helm on Jan. 15 and promised a review of all of the company's strategy and portfolio by the end of the year. The drop in share price was not exactly a vote of confidence, despite good results and Arconic's long-term opportunities.
Randgold misses profit estimates
Gold miner Randgold Resources reported profits that missed Wall Street expectations and the stock fell 6.7%. Gold sales were up 12.1% to $435 million and earnings per share fell 4.8% to $0.80. Analysts were expecting EPS of $0.83.
Gold production for the quarter of 341 million ounces was up 10% from the previous quarter but down 10% from the quarter a year ago. The average price per ounce gold of $1,278 was up 6% from last year. Cash costs per ounce increased 14% from the period a year earlier to $627 per ounce. Randgold announced its annual dividend will be $2.00 per share, twice the amount paid out last year.
Looking ahead to 2018, Randgold forecast that production would be between 1.3 million and 1.35 million ounces, compared with 1.32 million in 2017, at a cost between $590 and $640 per ounce. "Beyond that, our 10-year business plan is designed to increase net cash flows to support dividend and value growth and maintain Randgold's position as a global industry leader in sustainable profitability," said CEO Mark Bristow.
Besides the miss on profit, the market may also be reacting to reports that Randgold has discontinued a development project in the Democratic Republic of Congo, and has not yet resolved a dispute with that country over changes to its mining law that will hike taxes and royalties.