Stocks fell on Wednesday, extending yesterday's losses amid renewed fears over an impending trade war. This time, the markets shrugged off early gains after White House announced it will use tariffs to try and reduce the United States' trade deficit with China by $100 billion.
Today's stock market
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Industrials stocks led the way lower today, with the Industrial Select Sector SPDR Fund (NYSEMKT:XLI) falling 1.1%. But tech stocks held up surprisingly well on the heels of yesterday's losses, with the Technology Select Sector SPDR Fund (NYSEMKT:XLK) wavering between positive and negative territory before closing down just 0.1%.
As for individual stocks, earnings news left shares of Signet Jewelers (NYSE:SIG) tumbling, while an announcement from Google parent Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) sent shockwaves through cryptocurrency markets.
Signet Jewelers loses its luster
Signet Jewelers stock plunged 20.2% today after the parent company of Kay, Jared, Zales, and other jewelry retailers announced reasonably solid fiscal fourth-quarter 2018 results, but followed with underwhelming guidance and plans to implement a multiyear restructuring plan.
Signet's sales climbed 1% year over year to $2.29 billion, as an extra week in the quarter offset a 5.2% decline in same-store sales. Signet's adjusted net income grew 6.2% to $4.28 per share. Analysts, on average, were anticipating adjusted earnings of $4.25 per share on revenue of $2.24 billion.
CEO Virginia Drosos called it a "challenging year," adding, "We gained sales momentum in our Zales banner in the fourth quarter as our strategic initiatives began to take hold, but we experienced challenges at our Kay and Jared banners, including execution issues related to the first phase of our credit outsourcing transaction."
For perspective, last year Signet began transitioning to a completely outsourced credit structure in an effort to reduce financial risk.
Looking ahead to fiscal 2019, however, Signet told investors to expect adjusted earnings per share in the range of $3.75 to $4.25 -- far below expectations for earnings of $6.09 per share.
Finally, Signet announced a new three-year "comprehensive transformation plan" that will aim to reduce costs and allow the company to reinvest in growing its e-commerce platform, omnichannel capabilities, store experience, and product innovation.
This move might be exactly what Signet needs to return to taking market share and driving profitable growth. But Wall Street hates being effectively told to hurry up and wait, so it's no surprise to see the stock plunging in response.
Alphabet's cryptocurrency crackdown
Class C shares of Alphabet climbed 1% after the parent company of Google announced an impending ban on cryptocurrency advertising -- an extraordinary move for the tech giant considering it gathered more than 85% of its total revenue last quarter from online advertising.
Google disclosed that starting in June 2018, it will update its financial services policy to no longer allow ads for "cryptocurrencies and related content." This includes, but is not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice.
Cryptocurrencies weren't the only affected industry. In a follow-up blog post today, Google's director of sustainable ads, Scott Spencer, noted that the decision was part of a broader move to "tackle emerging threats," particularly with "unregulated or speculative financial products."
Given the jaw-dropping volatility and risks involved with investing in cryptocurrencies in recent months, it's safe to say that's a category to which they most certainly belong. And until those risks abate, I think Google is making a wise decision to step away from serving cryptocurrency ads.