Please ensure Javascript is enabled for purposes of website accessibility

Why Wells Fargo, Advanced Micro Devices, and Alkermes Slumped Today

By Dan Caplinger - Feb 5, 2018 at 4:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out what singled these stocks out on a bad market day.

Wall Street experienced another terrible day on Monday, with major benchmarks seeing even bigger losses than they had during the previous session. The Dow Jones Industrials fell more than 1,100 points as fears about the future of the bull market in stocks persisted, and many market participants sought to cash in their gains from the past several years in an effort to avoid losing a bigger portion of their profits. Some individual companies also suffered for reasons specific to their operations. Wells Fargo (WFC -1.17%), Advanced Micro Devices (AMD -3.45%), and Alkermes (ALKS -0.33%) were especially noteworthy decliners on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Wells Fargo takes a hit from the Fed

Shares of Wells Fargo dropped 10% after the bank got a huge punishment from the Federal Reserve. The Fed said that as a consequence of the customer service incidents that Wells Fargo has seen over the past year, the central bank will not allow Wells Fargo to grow its asset base above what it had on its books as of the end of 2017. The limit will remain in place until Wells Fargo takes steps that represent "sufficient improvement" in the eyes of central bankers. The move is unprecedented and puts an additional cloud over Wells Fargo, which some had hoped would be able to put the scandals behind it and concentrate on growth. Now, Wells Fargo could get left behind if the rest of the industry can take greater advantage of new opportunities in the current environment.

Model of Wells Fargo stagecoach.

Image source: Wells Fargo.

AMD deals with volatility

Advanced Micro Devices stock fell 7% as investors apparently wrestled with the competitive pressures that the chipmaker is facing right now. On one hand, AMD has done a good job of keeping its peers in the industry at bay, finding ways to carve out lucrative niches in key markets like gaming and cryptocurrency-friendly processing chips. Yet now that bitcoin and other cryptocurrencies have seen their prices fall dramatically, some shareholders fear that AMD could be vulnerable to a reversal in the industry's surge. Advanced Micro has performed well lately, but any signs of deterioration could lead to further swift declines.

Alkermes reverses course

Finally, shares of Alkermes fell 12%. The biotech stock had seen a big move upward on Friday, as some market participants speculated that a buyer might be interested in picking up some of its more promising assets. Consolidation in biotech is a growing trend, and Alkermes has a stable of interesting candidate drugs that might be attractive to a would-be acquirer. Yet the failure of any follow-through over the weekend, combined with the overall market's swoon, seemed to lead investors to think twice about the prospects for a takeover. Given concerns about the broader market, would-be acquirers might think twice before making a major asset purchase, and that could leave Alkermes on its own as an independent company for the foreseeable future.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$39.71 (-1.17%) $0.47
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$77.99 (-3.45%) $-2.79
Alkermes plc Stock Quote
Alkermes plc
ALKS
$30.29 (-0.33%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.