Why American International Group, Teck Resources, and Movado Group Slumped Today
Wednesday was yet another record-setting day for the stock market, as the Dow climbed triple digits and the S&P 500 and Nasdaq Composite followed the venerable average to unprecedented heights. Economic data showing rising inflation made it more likely that the Federal Reserve will look to boost interest rates at its next Federal Open Market Committee meeting next month, and the ripples throughout the bond market sent many investors to consider stocks instead. Yet despite the substantial rally, some stocks missed out on the move higher, and American International Group (NYSE: AIG), Teck Resources (NYSE: TECK), and Movado Group (NYSE: MOV) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
AIG deals with losses
Shares of American International Group fell 9% after the company reported fourth-quarter financial results. The insurance giant posted a net loss of $3.04 billion for the quarter, working out to $2.96 per share, as substantial losses in its commercial insurance lines hurt the company's overall performance. AIG has worked hard to transform its insurance business, entering into a reinsurance agreement with National Indemnity Company to reduce the risk of its own positions. Yet even though the personal lines business was profitable for the quarter, AIG still has to wrestle with the challenge of protecting itself from adverse reserve development in the future. Cost-cutting measures will help boost AIG's bottom line in time, but they won't insulate the company from volatility in its results depending on how catastrophic events pan out in the future.
Storms can hurt insurance company results. Image source: AIG.
Teck Resources falls despite record profits
Teck Resources was down 11% in the wake of its own fourth-quarter financial report. The mining company said that adjusted profit attributable to shareholders hit a new record high of $930 million during the quarter, working out to $1.61 per share. A big rebound in steelmaking coal prices helped lift Teck higher, and rising zinc prices also contributed to the company's positive performance last quarter. Yet what concerned investors is that Teck revealed that steelmaking coal prices have plunged from their mid-November highs, and that could create problems for the company going forward. Impairment charges related to its Fort Hills oil sands project also weighed on results, and Teck will need to see more strength in commodities ahead if it wants to sustain its potential for long-term gains.
Movado stops moving forward
Finally, Movado Group stock dropped 6%. The watch and accessories company declined in sympathy with fellow luxury retailer Fossil Group, which suffered an even bigger plunge after reporting downbeat financial performance for its holiday quarter. Fossil's problems have been ongoing and continued through the end of 2016, and Movado is dealing with many of the same difficult conditions that plague its rival in the space. Movado likely won't report its own results for another month or so, but given all the turmoil that has hit the retail space during this quarterly reporting season, investors fear that the company will end up facing the same headwinds and potentially seeing further share-price declines of its own.
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Dan Caplinger owns shares of AIG. The Motley Fool recommends MOV and FOSL. The Motley Fool has a disclosure policy.