Continued signs of strength in the U.S. economy kept investors in a good mood Friday, with major stock market indexes hitting new all-time records while the Nasdaq Composite (NASDAQINDEX:^IXIC) reached its best level in 14 years since the end of the tech boom. In general, positive news from several individual companies helped boost the overall tone of the market, but some exceptions held stocks back from more substantial gains. Among them were Hercules Offshore (UNKNOWN:HERO.DL), Merrimack Pharmaceuticals (NASDAQ:MACK), and Smith & Wesson Holdings (NASDAQ:AOBC), which were among the worst performers in the stock market today.

Hercules Offshore fell 12% as the drilling specialist chose to give up on a potentially lucrative contract for a rig off the coast of the African country of Angola. Angola has been a hotbed of energy activity lately, and investors were disappointed that Hercules couldn't come up with ways of getting past a roadblock that had held up the project's approval. Given the competitive disadvantage Hercules Offshore has suffered compared to rivals that are more focused on the more promising deepwater and ultra-deepwater opportunities for drilling companies, shareholders were obviously sensitive to any failure on Hercules Offshore's part to make the most of the changes it does have to earn profits.

Merrimack Pharmaceuticals declined 11% after the cancer-treatment developer said that it would take back full control of its global rights from Sanofi to work on and sell its MM-121 monoclonal-antibody based cancer treatment candidate. Merrimack has had mixed success with MM-121, with clinical data not supporting positive outcomes in ovarian cancer and more recent data in a breast-cancer trial showing a greater incidence of adverse events. With its partner essentially backing out, Merrimack will have to convince shareholders that the treatment still has solid potential.

Source: Smith & Wesson.

Smith & Wesson Holdings gave up 9% after its fiscal fourth-quarter earnings report last night, which included troubling guidance suggesting falling gun sales. Backward-looking results looked strong, with both revenue and earnings faring better than most investors had thought. But projections for current-quarter and full fiscal year revenue were far lower than projected, scaring many investors. Smart long-term investors are aware that Smith & Wesson has anticipated this trend for a long time, and the bigger question is whether the company can steal away market share from other gun manufacturers and strengthen its position within the industry. If so, then today's sell-off could bring a long-term opportunity for those willing to take the risk.