Please ensure Javascript is enabled for purposes of website accessibility

Why Reynolds American, Tyson Foods, and Harmony Gold Slumped Today

By Dan Caplinger - Apr 13, 2016 at 6:02PM

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

Even in a climbing market, these stocks fell. Find out why.

Image source: Reynolds American.

Some days, it's tough to find any stocks that lose ground. Wednesday was one of those days, because investors were excited about the beginning of earnings season in the financial industry as well as signs of favorable macroeconomic conditions in the red-hot emerging market of China. Once again, the stock market is nearing a moment of truth, as today's gains of more than 1% for the Dow and S&P 500 point to the possibility of another challenge toward all-time record highs for the U.S. market.

Still, even with the overall good cheer on Wall Street Wednesday, some stocks missed out on the rally. Among them were Reynolds American (NYSE: RAI), Tyson Foods (NYSE: TSN), and Harmony Gold (NYSE: HMY).

Reynolds American was down more than 4% on a tough day for tobacco stocks generally. Some reports pointed to nervousness about the potential for impending regulations on electronic cigarettes and other alternative products to weigh on growth prospects, especially if the specific regulatory guidance puts a disincentive on innovative products. Another possibility is that many investors see Reynolds American and other tobacco makers as a relatively safe, low-volatility play, and if the stock market is starting to move higher again, it's time to ride riskier stocks higher rather than sticking with a conservative alternative in the tobacco industry.

Tyson Foods also fell 4% after getting a downgrade from analysts at Credit Agricole. To be fair, the downward movement in the analyst's opinion was only from Buy to Outperform, suggesting the meat producer still has some room for further upside. Investors have gotten a lot more excited about Tyson's earnings prospects for the just-ended quarter and for the full year, pushing both figures higher by roughly 10% over the past few months. Given how well the stock has performed, having nearly doubled from 52-week lows, Wednesday's pullback didn't put a huge dent in Tyson's returns over the long haul.

Finally, Harmony Gold was down 5%. The South African gold miner has done extremely well lately, rising close to levels not seen since 2013. Not only have gold prices finally started to bounce back recently, but a long-awaited rebound in the value of the South African rand compared to the U.S. dollar also gave Harmony a competitive advantage over some of its peers in other countries. Yet today's decline in gold prices and rise in the dollar's value against the rand had a double-whammy effect on Harmony stock, highlighting the vulnerability of international miners in the current environment. As long as commodity markets remain in turmoil, Harmony Gold investors will have to find ways to navigate an ever-changing environment while still remaining profitable.

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

Tyson Foods, Inc. Stock Quote
Tyson Foods, Inc.
$92.16 (1.51%) $1.37
Reynolds American Inc. Stock Quote
Reynolds American Inc.
Harmony Gold Mining Company Limited Stock Quote
Harmony Gold Mining Company Limited
$3.62 (0.56%) $0.02

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

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.