News Column

Daily Wrap: Missed targets weigh on market, drag down Amazon stock

July 25, 2014

By Jacob Barker, St. Louis Post-Dispatch

July 25--TODAY'S INDEXES -- Dow industrials 16,960.57 -123.57

S&P 500 1978.34 -9.64

Nasdaq 4449.56 -22.54

MISSED DELIVERY: The major indexes all fell Friday after some big names missed earnings targets. The loss leader for the day was retail darling Amazon, which missed analyst earnings targets and posted a loss of $126 million in the second quarter. Shares of the Internet retailer plunged 10 percent on Friday, leading the S&P 500. The retailer's revenue increased, but spending on technology, including the new Amazon Fire phone that started selling today, helped push it into the red for the quarter. Worries over business spending also led to an increase in Treasuries.

TENET UP: Tenet Healthcare shares were among the day's biggest gainers following expansion plans and new joint ventures announced during the week. Shares of the hospital operator, which runs Des Peres and St. Louis University hospitals, jumped 9 percent to close at $53.61. Earlier in the week, the company said it would take a majority stake in the three-hospital Carondelet Health Network of Tuscon in Arizona. Selling the stake is the Edmundson-based Catholic hospital system Ascension Health.

NO LOVE: Mallinckrodt shares fell almost three percent after Greenlight Capital Inc., a hedge-fund run by famous short-er David Einhorn (yeah, the one who shorted Lehman Brothers stock before it collapsed) said it saw an opportunity to bet against the company if it finishes a planned takeover of Questcor Pharmaceuticals Inc.Mallinckrodt "is setting itself up to be a very attractive short-sale candidate if the merger is completed," Greenlight wrote, according to Bloomberg reports. Mallinckrodt shares fell 2.86 percent on the day, to $74.37.

LOCAL INDEX: The Bloomberg St. Louis Index fell 1 percent.


Huttig Building Products 5.6% Centene Corp -6.8%

Reinsurance Group 1.1% Viasystems Group -6.5%

SunEdison Semiconductor 0.9% Build-A-Bear Workshop -4.6%

LOCAL LOSER: Centene Corp shares were hit hard after Wells Fargo analysts downgraded the company from "outperform" to "market perform." No matter that the managed-care company posted a 24 percent jump in quarterly profit earlier in the week, running with the pack just isn't good enough, and shares dropped 6.8 percent to $74.21.

ANALYST'S INSIGHTS: Kind words about Reinsurance Group of America from Sterne Agee analyst, John Nadel, who raised the company's 2014 estimated earnings per share from $7.73 to a new $8.05: "RGA's financial reinsurance business continues to generate strong growth as well, with fees up 34% YoY, continuing a trend of very strong double-digit growth since 2Q12. We believe investors are not discounting sufficiently RGA's better and more diversified growth profile relative to the traditional life insurance underwriters." The company was the No. 2 gainer among St. Louis stocks Friday, with shares rising 1.13 percent to $81.74.

THE WEEK AHEAD: Some of St. Louis's most successful companies report next week: Energizer, Express Scripts and Panera Bread. Brewing giant Anheuser-Busch InBev will also say how it did in the second quarter.

Plenty of other St. Louis companies release their earnings, too: Arch Coal, Aegion, American Railcar, Reliv International, Cass Information Systems, Perficient Inc. and Pulaski Bank, to name a few.

Ameren Corp. also faces a challenge from Missouri customers seeking to bring down its rates.

Jacob Barker is a business reporter at the Post-Dispatch. Follow him on Twitter @jacobbarker and the Business section @postdispatchbiz.


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Source: St. Louis Post-Dispatch (MO)

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