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Why Chesapeake Energy Corporation, Delta Air Lines Inc., and Peabody Energy Corp. Are Today’s 3 Worst Stocks

By John Divine - Jul 7, 2014 at 7:37PM

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Two energy companies and one travel company with strained international relations are the three worst performers in the stock market today.

After reaching fresh new all-time highs ahead of the Fourth of July Holiday last week, the S&P 500 Index ( ^GSPC 2.07% ) retreated today, as investors pared their optimism. Optimism was especially scarce from shareholders in Chesapeake Energy ( CHKA.Q ), Delta Air Lines ( DAL -0.26% ), and Peabody Energy ( BTU ), which finished as three of the worst stocks in the 500-stock index Monday. The S&P, for its part, lost 7 points, or 0.4%, to end at 1,977.

Blame the weatherman for Chesapeake Energy's steep, 4.6% tumble today. Actually, that's not fair: blame the weather itself, which looks like it'll be cooler than most expected in the Midwest and Northeast in the coming days. That's great, right? More comfortable conditions, less need for air conditioning, lower electric bills...OK, I'm starting to understand why Chesapeake stock lost some ground today. Shares of the natural gas company are strongly correlated with natural gas prices, which cratered 4.1% Monday in light of the cooler forecasts.

Engineers work on a plane in Delta's fleet. Source: Delta blog

Delta Air Lines shed 4.4% today after the airline said it was sharply reducing the number of flights it would offer to Venezuela, from one per day to one per week. That's because the politically volatile country isn't letting Delta Air Lines repatriate the money it takes in from patrons in bolivars, the company says. In other words, investors aren't only worried about the newly relaxed flight schedule to Venezuela; the fact that Venezuela seems to be forcing Delta to keep those bolivars tied up abroad will likely strain relations and potentially encourage ill-advised Venezuelan investments.

Peabody Energy lost 3.7% on Monday after receiving a downgrade from Deutsche Bank, which reassigned Peabody shares as a hold from its previous position as a buy. Metallurgical coal was singled out as a particularly tough material to make a buck on, due to ongoing cost pressures. If there's a silver lining to be had, Peabody Energy is actually diversified into thermal coal, which it sells to utilities providers who in turn provide energy to everyday consumers. Unfortunately, that wasn't much of a comfort to Peabody shareholders today considering the cool weather forecast set to reduce consumer electric bills over the next week or so.

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.

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Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,686.75 (2.07%) $95.08
Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
CHKA.Q
Peabody Energy Corporation Stock Quote
Peabody Energy Corporation
BTU
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$38.04 (-0.26%) $0.10

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

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