Why Whole Foods Market, HD Supply, and Advanced Micro Devices Slumped Today

Image source: Whole Foods Market.

The stock market treaded water on Wednesday, with the Dow and S&P 500 both posting minimal losses even as the Nasdaq Composite inched higher to set a new all-time record high. Investors seemed unwilling to take major positions in either direction before knowing how the Federal Reserve and other global central banks are likely to respond to current economic conditions, and that uncertainty offset solid gains in the energy markets that sent crude oil prices up more than $1 to climb above $46 per barrel. Several stocks held the market back from gains, and among the poorest performers were Whole Foods Market (NASDAQ: WFM), HD Supply (NASDAQ: HDS), and Advanced Micro Devices (NASDAQ: AMD).

Whole Foods falls in sympathy with a smaller rival

Whole Foods Market lost 5% in the wake of a warning from competing natural foods specialist Sprouts Farmers Market. Whole Foods' smaller rival updated its guidance, pointing to ongoing deflation and increased pressure on the promotional front in pulling back on its outlook for the rest of the year. With expectations for flat comparable-store sales growth for the third quarter, Sprouts said that it expects earnings per share of $0.83 to $0.86 for the full 2016 year. Whole Foods investors interpreted the poor results of its industry peer as reflective of the environment for natural and organic grocery products as a whole. Given the challenges that Whole Foods has already faced, this new challenge was the last thing that many Whole Foods investors wanted to see hurting the pioneering chain's potential rebound.

HD Supply sees income drop

HD Supply dropped 12% after announcing second-quarter financial results that fell short of expectations. The distributor of industrial materials said that net income dropped by about 10%, and the company also reined in its guidance for its third-quarter results. HD Supply now believes that it might not be able to grow its revenue for the full year beyond what it brought in last year, and that could bode poorly for a stock that had been hovering near all-time record highs. Investors will want to see signs that HD Supply can continue thriving no matter what the industrial business cycle brings, and for now, they're concerned that the future might not be as bright as the past has been.

AMD raises capital

Finally, Advanced Micro Devices fell 7%. The tech company said late Tuesday that it would raise capital through offerings of stock and debt, including a $600 million secondary offering of common shares and $450 million in 10-year convertible senior notes. The company expects to use the net proceeds to repay what it owes on its credit facility and to restructure other debt by offering to buy back outstanding senior notes. The stock drop reflects concerns about the potential dilutive effect of issuing equity, but with the shares having jumped to their highest levels since 2012, AMD seems to be taking advantage of investor optimism at a perfect time. In the long run, the move should be healthy for AMD's business, even if shareholders don't reap as much of the reward as they otherwise might have.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Whole Foods Market. The Motley Fool owns shares of and recommends Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.