Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Market Week in Review: GM Leads the S&P Down 2% on Rising Fears; Wynn, Priceline Fall Hard

By Dan Caplinger - Mar 15, 2014 at 11:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P 500 fell sharply on nervousness in the Crimean region of Ukraine. Find out why these stocks were among those hardest hit last week.

Despite celebrating the fifth anniversary of the beginning of the bull market, the S&P 500 ( ^GSPC 2.10% ) wasn't in the mood to celebrate, with the index falling 2% over the past week. Continuing worries about what will happen between Ukraine and Russia weighed on the market, which fell on four out of five trading days. The worst performer in the S&P was General Motors ( GM 3.81% ), but several other stocks dropped almost as much, including Diamond Offshore Drilling ( DO ), Wynn Resorts ( WYNN 4.09% ), and ( BKNG 1.85% ).

General Motors dropped more than 9% in the wake of a massive recall of cars that had ignition-switch defects. The problem involves the Chevy Cobalt and five other cars featuring the Chevrolet, Pontiac, and Saturn brands manufactured from 2003 to 2007, with the potential for slipping ignition keys inadvertently turning the engine off. Although the problem isn't hard to fix, the real issue for General Motors at this point is that the automaker knew about the defect as early as 2001, yet the company chose not to take action. Now, class action lawsuits are starting to emerge, and what GM does from here could be critical in whether it continues its impressive rebound since emerging from bankruptcy.

Diamond Offshore fell almost 9% in a tough week for the entire drilling industry. For the past several years, a huge boost in deepwater drilling activity has been supportive for the industry on the whole. But the problem that Diamond faces is that its fleet is much older than those of some of its rivals, with its average age for its floater fleet just under 30 years. Although Diamond has plans to have newbuild drill-ships delivered in coming years, some fear that dayrates for those ships could fall substantially from current levels by the time they're available for Diamond.

Wynn Resorts declined almost 7% despite the company's continuing belief that it can squeeze more from its Macau casinos. Wynn is impatiently awaiting completion of its Cotai Strip project, which it expects to open in early 2016. Yet the larger-scale issue facing the entire gaming industry is that economic tensions in China could lead to a pullback in gaming activity in Macau. Even with the week's decline, Wynn has still almost doubled in the past 12 months, and a small correction could be good for investors seeking to add to positions.

Priceline also posted about a 7% drop. Geopolitical tensions are bad for international travel, and Priceline's strength over its competitors has come from its early mover status in seeing the potential of building a worldwide network of hotels serving key travel destinations. If trouble in Ukraine spreads elsewhere around the world, then the impact on Priceline could be huge, especially given the stock's impressive and almost uninterrupted gains over the past decade.

Stay informed
As the S&P 500 has been under siege from the Ukrainian situation, you need to keep watching the stocks that get hit the hardest. That will leave you better prepared to deal with what could happen next.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,688.03 (2.10%) $96.36
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
$88.38 (4.09%) $3.47
General Motors Company Stock Quote
General Motors Company
$62.12 (3.81%) $2.28
Diamond Offshore Drilling, Inc. Stock Quote
Diamond Offshore Drilling, Inc.
Booking Holdings Stock Quote
Booking Holdings
$2,268.55 (1.85%) $41.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.