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Why Nordstrom, Chesapeake Energy, and Boston Beer Slumped Today

By Dan Caplinger – Sep 17, 2019 at 4:35PM

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Blame concerns about the economy for declines in some key stocks.

Tuesday saw a turbulent session on Wall Street, with market participants trying to find new direction as they continued to evaluate geopolitical events over the weekend. Many investors remained focused on the energy markets, where crude oil prices steadied following Monday's big move higher. Yet even while some sectors benefited greatly from oil's surge, some companies could face bigger challenges. Nordstrom (JWN 0.80%), Chesapeake Energy (CHKA.Q), and Boston Beer (SAM 1.39%) were among the worst performers. Here's why they did so poorly.

Will Nordstrom shoppers face new financial pressures?

Shares of Nordstrom dropped 10% as investors in the upscale retailer tried to measure what (if any) impact recent events affecting the retail industry could have on its revenue and earnings. Traditionally, department store retailers have suffered when their customers faced threats to their discretionary income, and one of the most obvious things that can take money out of shoppers' wallets is a rise in gasoline prices. Yet it's unclear whether Nordstrom shoppers, who tend to be better off financially than those who shop at rival retailers, will really change their behavior simply because prices at the pump rise. Regardless, Nordstrom has tried to respond to competitive pressures from both brick-and-mortar and online retail rivals, and it has more work to do before shareholders will feel completely confident about its prospects.

Front of glass-windowed Nordstrom location, with wet sidewalks surrounding it.

Image source: Nordstrom.

Chesapeake gives back some gains

Chesapeake Energy's stock fell 14%, losing most of the ground it picked up Monday following the surge in energy prices. Reports out of Saudi Arabia suggested that the oil-producing nation would be able to get its production infrastructure back up and running fairly quickly, returning substantial amounts of supply to the oil market. Today's drop was more modest than yesterday's rise, with crude oil prices falling about $3 per barrel but still remaining around the $60 mark. For Chesapeake, more dramatic price increases would be helpful to get the company into healthier financial condition. Unfortunately, it's unclear whether oil markets will cooperate with that plan.

Boston Beer falls as a rival considers an IPO

Finally, shares of Boston Beer lost 9%. The maker of Sam Adams beer had to deal with a strategic move from a key competitor Tuesday, as Anheuser-Busch InBev announced that it would once again think about taking its Asian beer business public on the Hong Kong market at some point this year. Boston Beer doesn't have nearly the global scope that Anheuser-Busch does, but it has also looked at ways to expand, largely through new products outside of the traditional beer category. With so many alternatives to beer becoming available to consumers, many fear that Boston Beer will have to pivot quickly in order to avoid losing a significant portion of its business.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Boston Beer. The Motley Fool recommends BUD and Nordstrom. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
$324.67 (1.39%) $4.46
Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
$17.74 (0.80%) $0.14

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