Wednesday reminded investors of how much power the Federal Reserve wields in guiding the stock market. Until the central bank's afternoon announcement, the market traded largely higher, defying negative earnings news from a copy of key components of the Dow Jones Industrials. Yet the Fed's pronouncement failed to lift the veil of uncertainty about the future course of interest rates, and that in turn led stocks lower for the remainder of the day. Among some of the worst performers on Wednesday were VMware (VMW -1.72%), U.S. Steel (X -2.10%), and Tupperware Brands (TUP -5.10%).
VMware sank almost 10% after announcing its latest quarterly results. The cloud-computing and virtual-technology specialist's fourth-quarter performance actually exceeded what most investors had expected to see, including revenue gains of 10% and a 17% rise in adjusted earnings per share. What disappointed VMware shareholders was that the company gave guidance for just 2% to 4% growth in revenue for 2016, far slower than its previous guidance, and earnings growth could disappear almost entirely if VMware's predictions are correct. The fact that VMware is also laying off 800 employees raised fears that the company's fast-growth phase could be coming to an end, and that makes the stock a tougher sale for those counting on top-line gains to support stock returns.
U.S. Steel plunged 14%, joining the disappointing earnings crowd by posting a loss of almost $1 billion for the fourth quarter. Even though much of that decline came from a one-time provision related to taxes, the steelmaker also continues to struggle in a tough market. Moreover, U.S. Steel was hesitant to predict a turnaround in 2016, instead noting that uncertainty about the future direction of economic growth in many areas of the world prevented it from being too optimistic about its future results over the coming year. Given how long the steel industry has struggled, investors are used to having to be patient, but U.S. Steel's comments about the market for the heavy metal were quite downbeat.
Finally, Tupperware Brands took a 15% hit Wednesday. The maker of household items was the latest victim of the strong U.S. dollar in reporting a 13% drop in revenue for its fiscal first quarter that sent adjusted earnings per share down 22% from year-ago levels. On a currency-neutral basis, Tupperware said that it actually gained ground in most of its international markets, but some of those following the stock worried that even that growth wasn't as strong as the company had seen in the past. Tupperware is looking at initiatives to help strengthen its local sales force on the ground in key geographical areas, but the company still gave downbeat guidance for 2016 revenue and net income. It could take considerable time before Tupperware's efforts to stabilize its business show up more clearly in its financial results.