The stock market finished with small losses on Thursday, with major benchmarks falling between 0.2% and 0.5% to pull back from their recent record run. Investors are working through uncertainties about the future course of the U.S. economy, and the biggest unknown is how the Federal Reserve is likely to respond to a mix of economic data in the near future. Most increasingly believe that an interest rate increase is coming before the end of 2017, and a shrinking of the central bank's balance sheet could finally test the staying power of the bull market. Also hurting sentiment was disappointing news from several companies, and Intercept Pharmaceuticals (NASDAQ: ICPT), Transocean (NYSE: RIG), and U.S. Steel (NYSE: X) 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.
Intercept falls on safety issues
Shares of Intercept Pharmaceuticals lost about a quarter of their value after the U.S. Food and Drug Administration issued a warning about the company's Ocaliva treatment for liver disease. The FDA's warning stated that some patients are receiving incorrect doses of the drug, and that has the potential to boost the risk of liver damage that could lead to organ failure and even death. The move follows a similar letter that Intercept itself sent out with some of the same warnings, but investors appear to be taking the FDA letter more seriously. In the long run, Intercept hopes to overcome safety concerns, but shareholders don't seem entirely confident with Ocaliva's safety profile going forward.
Transocean gives back ground
Transocean stock fell 7%, reversing gains from Wednesday's trading session. The offshore driller benefited yesterday from a favorable move in the crude oil market that sent prices above the $50-per-barrel mark, signaling a longer-term potential rebound for oil. Yet conditions in the market remain difficult, and Transocean suffered bad news on Wednesday when drillship customer Chevron chose to terminate its drilling contract early for one of Transocean's vessels. Transocean will receive $148 million in early termination fees as a result of the move, but investors remain nervous that anything short of a major jump in crude could dissuade customers from moving more aggressively back to the offshore drilling arena.
U.S. Steel hits the skids
Finally, shares of U.S. Steel declined more than 4%. The steel industry has been volatile lately, giving back gains from earlier in the year when it seemed likely that a major infrastructure program would support a big comeback in sales volume and demand for U.S. Steel's products. In addition, recent damage from major hurricanes has led to hopes that a domestic construction boom could come in the storms' wake. Yet longtime investors know that U.S. Steel has some competitive disadvantages compared to the business models that some of its rivals have, and that seems to have motivated the pullback in the stock today.
Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
*Stock Advisor returns as of Sept. 5, 2017.