Tuesday was a solid day on Wall Street, with stock market indexes finishing with modest gains. The Dow Jones Industrial Average had been up more than 250 points early in the session as investors got enthusiastic about the prospects for the U.S. economy defying signs of a slowdown and continuing to grow. Yet that optimism seemed to fade throughout the day, and other data pointed to potential challenges that could hold the global economy back. In addition, some downbeat news from key companies hurt investor sentiment. Carnival (NYSE: CCL), Criteo (NASDAQ: CRTO), and Molina Healthcare (NYSE: MOH) were among the worst performers. Here's why they did so poorly.
Shares of Carnival fell 9% after the cruise ship operator reported its fiscal first-quarter financial results. Revenue climbed 10% from year-ago levels, but Carnival said that a 10% drop in adjusted net income stemmed from higher operating expenses, rising fuel costs, and unfavorable currency movements. Demand for bookings has remained strong, but the big question facing Carnival is whether it can maintain pricing discipline or whether it'll have to offer discounts in order to fill cabins. With the European economy in particular under pressure, Carnival will have to be fortunate in order to avoid more difficult conditions in the future.
Image source: Carnival.
Criteo gets poor reviews
Criteo's stock dropped 17% following negative analyst moves from a pair of Wall Street analysts. Both KeyBanc Capital Markets and SunTrust Robinson Humphrey reduced their ratings on the advertising platform provider, adding to the lack of confidence among investors following a decision from Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) to change how it handles third-party advertising on some of its key products, including the Chrome browser and the Google Marketing Platform. KeyBanc's rating moved from overweight to sector weight, while SunTrust went from buy to hold, but both analysts think that Criteo might face similar difficulties with other partners, further exacerbating the potential problem.
Molina deals with Obamacare threats
Finally, shares of Molina Healthcare finished lower by 10%. The healthcare company's investors reacted negatively to news that the U.S. Department of Justice will seek to have the Patient Protection and Affordable Care Act struck down in its entirety as unconstitutional, following a federal district court decision in northern Texas that made that ruling back in December. The ruling has been appealed, but the potential impact on Molina and its peers could be significant if it's upheld. Until now, federal officials had sought to have only certain parts of the ACA overturned, but the shift in strategy poses a more extensive threat to the legislation -- and Molina's Medicaid business is more exposed than many other insurers to such a move.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends Carnival and Criteo. The Motley Fool has a disclosure policy.