Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Major stock market benchmarks fell for the fifth day in a row, as a strong GDP report raised fears that the Federal Reserve might end its quantitative-easing program sooner than investors had hoped. Yet for the biggest decliners in the market, company-specific issues were largely to blame for steep losses. ReneSola (SOL 8.88%), Wet Seal (NASDAQ: WTSL), and J.C. Penney (JCPN.Q) all saw their shares lose substantial ground today. Let's take a look at some of the causes of those declines.
ReneSola plunged 21% as the Chinese solar company posted a huge loss due largely to its botched attempt to improve its internal efficiency with a production plant upgrade. Even though revenue almost doubled from year-ago levels, the huge impairment charge related to the polysilicon-factory fiasco was too large to ignore. Given the much better results that ReneSola's peers have produced lately, it's no surprise to see investors abandoning the stock, especially with Fool solar expert Travis Hoium pointing to low gross margins as a potential danger sign in the future.
Wet Seal fell 14% following its own earnings report. Same-store sales gains of 0.8% weren't enough to prevent overall revenue from dropping 6%, and investors weren't pleased with the retailer's guidance for a substantial current-quarter loss in what is supposed to be the company's most profitable holiday season. Given the huge competition in the industry, Wet Seal appears to be a victim of sharp discounting and other bottom-line pressure that could make this holiday season one to forget.
Elsewhere in the retail world, J.C. Penney declined 8% after hedge fund investor Kyle Bass said that his fund had sold off its stake in the ailing retailer. The fund is still holding onto some J.C. Penney debt, which has gained attention from distressed-debt specialists looking to capitalize on the company's assets. Increasingly, those following the company are coming to the conclusion that J.C. Penney might have fallen too far to recover fully. With concerns about consumer spending generally, the holiday season might not be enough to save J.C. Penney from its eventual fate.
