Earnings season has officially begun, and investors can't seem to bury their heads in the sand quickly enough. Reports from aluminum giant Alcoa (NYSE:AA) and oil juggernaut Chevron (NYSE:CVX) disappointed a market that had high hopes going into the fourth quarter.
Alcoa's cautionary statements that a slowdown in China would weaken future results when compounded with its already high levels of aluminum inventory bode poorly for near-term aluminum pricing, as well as manufacturing growth.
Chevron's weakness had nothing to do with China when it warned that it expected substantially lower earnings in its upcoming quarter. The No. 2 oil company behind ExxonMobil blamed lower oil prices and Hurricane Isaac for disrupting production at a Mississippi refinery as the reason for its lowered guidance.
Tack on pre-existing worries in Europe and China, as well as continued weak growth in the U.S., and it's pretty clear why the S&P 500 (SNPINDEX:^GSPC) sank for a fourth consecutive day, ending down 8.92 points (-0.62%), to 1,432.56. Let's have a quick look at two additional companies putting heavy downside pressure on the S&P 500 today.
Unsurprisingly, oil refiners bit the dust today following Chevron's announcement. Valero Energy (NYSE:VLO) took the brunt of the selling pressure, ending down an S&P 500 worst 6.2%. Lower oil prices are generally good for refiners like Valero because their margins tend to be higher; however, production interruptions and slowing global growth rates could be a possible negative as these refiners ready to report their results.
Energy-drink maker Monster Beverage (NASDAQ:MNST) also lost its charge, down 5.5%, following an analyst downgrade from Stifel Nicolaus to "hold" from "buy." The covering analyst cited tough year-over-year comparisons, as well as growing regulatory risks as the reason for the downgrade, although he still expects Monster to grow by the mid-teens through 2015. I foresaw the regulatory risks in energy drinks months ago and have long felt that Monster is valued at an undeserved premium to its peers.
An energy stock for all situations
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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