Please ensure Javascript is enabled for purposes of website accessibility

Why United States Steel Corporation's Stock Price Fell Nearly 16% in August

By Reuben Gregg Brewer - Sep 9, 2015 at 10:35AM

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 past few months have been volatile for U.S. Steel's shares, and August was no different, The future will probably bring more of the same.

What: United States Steel Corporation (NYSE: X) watched its stock price decline by a painful 16% in August, continuing the year-long downtrend that's seen the steel company's shares fall roughly 40%.

So what: U.S. Steel has been battling low steel prices and increasing low-priced imports for some time, and this year has been particularly rough. However, the stock bounced higher toward the end of July, a trend that carried into August. While investors may have started to believe the worst was past, it proved to be just a fleeting rally, as U.S. Steel's shares started to head lower again as August progressed.

The thing is, there really wasn't too much on the news front that's really positive. For example, the company announced plans to shut a furnace, continues to wrangle with unions, and announced that it would freeze a defined benefit pension plan. While these things may all help reduce operating expenses, the real issue to consider is why they're necessary. And the answer is that the steel industry continues to struggle, with U.S. Steel going along for the ride.

Now what: It was a bad month for U.S. Steel's stock overall, capping what has been a generally bad year. Nothing has changed on a fundamental level that should leave investors thinking that the worst has passed. Although the events surrounding the company may be exciting, U.S. Steel still has a lot of negatives stacked against it.

So investors should be careful, and that's particularly true with regard to a company like U.S. Steel, which has a lot of operations built on older steelmaking technology. It will take a pronounced upturn in steel prices for U.S. Steel to benefit along with some of its peers that are using more modern tech.

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

United States Steel Corporation Stock Quote
United States Steel Corporation
X
$23.79 (-1.90%) $0.46

*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
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

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

Premium Investing Services

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