AmEx shareholders could use a vacation after today's share-price drop. Image source: American Express.
Stocks performed well on Friday, giving the overall market its first weekly gains of 2016. Crude oil prices soared 9% to close above $32 per barrel, and that led to dozens of oil-related stocks posting double-digit percentage gains. Yet even with broad-based advances that sent the S&P 500 and Nasdaq Composite up 2% to 3% on the day, several stocks posted bad news on the individual-company level that left them with serious losses. Among them were Dow component American Express (AXP 2.56%), as well as Tutor Perini (TPC 3.40%) and Freeport-McMoRan (FCX -1.96%).z
American Express sank more than 12%, costing the Dow about 60 points after announcing its quarterly results Thursday afternoon. The card giant reported substantial declines in revenue and net income, choosing to take a $419 million charge related to impairment and restructuring expenses. AmEx also said it would take steps over the next couple of years to find cost savings adding up to $1 billion annually. Nevertheless, weakness in the company's international card services segment and global commercial services division offset some of the gains in the U.S. card services unit, and the guidance that American Express suggests tepid growth at best through the end of 2017. Competition within the card industry has intensified substantially, and investors are clearly worried that the company won't be able to keep up with its peers under tough conditions in its own business.
Tutor Perini fell 17% in the wake of its announcement this morning on its preliminary results for the fourth quarter. The civil and building construction company said that it expects full-year 2015 results to come in significantly less than it originally predicted, citing charges related to a major project and adverse results in litigation. All in all, Tutor Perini said earnings for the year would be $1 to $1.25 per share less than its earlier guidance, lopping off more than half of its profits. Moreover, Tutor Perini's 2016 guidance for earnings of $1.90 to $2.20 per share didn't inspire great confidence for a high-growth trajectory.
Finally, Freeport-McMoRan once more found itself on the wrong side of the tape Friday, dropping 9%. The decline seemed to be out of place for the company, given that both oil and copper prices soared on the day. The problem is that even with a partial commodity-price recovery, investors expect Freeport-McMoRan to need to take further impairment losses to reflect lower oil prices on its books, and that will necessitate more cash-raising moves. Freeport has only so many assets to sell and only so many areas where it can cut capital expenditures, and it needs to have enough cash on hand to cover its ongoing expenses. When a stock falls both on good days for its sector and on bad ones, it bodes ill for its shareholders and its long-term prospects.
