Wall Street showed signs of discord on Thursday, with various major benchmarks moving in opposite directions, reflecting some of the cross-currents among different sectors. After a long advance to record heights for the Nasdaq Composite, tech stocks were generally weaker today, but some high-profile consumer favorites in the Dow Jones Industrial Average powered that benchmark up. Market sentiment appears to be generally solid, but some companies had to deal with specific issues that sent their shares lower. MercadoLibre (NASDAQ:MELI), REV Group (NYSE:REVG), and ArcelorMittal (NYSE:MT) were among the worst performers on the day. Here's why they did so poorly.
MercadoLibre deals with Brazilian woes
Shares of MercadoLibre dropped 8% on a bad day for stocks with significant exposure to the Brazilian market. Brazil's Bovespa index fell 4%, extending its correction to about 15% since February, and the value of the Brazilian real fell to its lowest level in more than a year amid labor problems and political uncertainty in the South American nation. MercadoLibre has benefited greatly from the recovery in Brazil's consumer economy in recent years, but a fast rise in fuel prices has destabilized the country. Nothing about MercadoLibre's long-term prospects has changed, but shareholders just seem worried about the near-term impact of potential social unrest on consumers' willingness to make purchases.
REV Group hits the brakes
REV Group stock plunged 19% after the producer of specialty vehicles for fire and emergency, commercial, and recreational purposes reported its fiscal second-quarter results. The company saw better sales than it did in the prior-year period, but adjusted profits fell from year-ago levels. CEO Tim Sullivan pointed to challenges including cost inflation, component availability, and weakness in some key areas of specialization as causes for the sluggish performance, and REV Group also cut its outlook for its full fiscal year. Acquisitions have helped bolster REV Group's exposure to the red-hot RV industry, but now the company has to make sure it can execute properly in order to take advantage of the opportunity.
ArcelorMittal deals with trade pressures
Finally, shares of ArcelorMittal fell 5%. In the wake of the White House's imposition of tariffs on steel and aluminum imports from Europe and other key trading partners, the leader of ArcelorMittal's French business unit called for the European Union to impose similar quotas and other trade restrictions on imports in retaliation. ArcelorMittal gets some of its revenue from the U.S. market, but about half of its sales are from within the European Union, and if the EU follows through with a proportional response to U.S. actions, the European steelmaker might well end up getting the benefit of higher prices for its rivals in a key market. Where trade disputes will end up is anyone's guess, but for now, investors seem to prefer to avoid the potential for bad surprises.