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Why Cooper Tire & Rubber, Insperity, and Lexicon Pharmaceuticals Slumped Today

Dan Caplinger, The Motley Fool

Wall Street had a mixed session on Monday as investors grappled to figure out what the next couple of days are likely to bring for the markets and the economy. Plunging bond yields have indicated the credit markets' assessment that the Federal Reserve will almost certainly cut short-term interest rates when it meets later this week, but whether a rate cut will have a beneficial impact on economic growth remains to be seen. In any event, some stocks lost ground today due to some unique challenges. Cooper Tire & Rubber (NYSE: CTB), Insperity (NYSE: NSP), and Lexicon Pharmaceuticals (NASDAQ: LXRX) were among the worst performers. Here's why they did so poorly.

Cooper gets a flat

Shares of Cooper Tire & Rubber sank close to 10% after the tire maker reported weak results for the second quarter of 2019. Revenue was down almost 3% from year-ago levels on a nearly 5% drop in sales volume, and net income fell more than 40% over the same period. CEO Brad Hughes was pleased with the way Cooper performed in the U.S. market, but internationally, weakness in Chinese vehicle demand and a poor replacement tire market in Europe weighed on the company's results. With a number of strategic initiatives underway, Cooper believes that its prospects for the future look brighter. Yet at least in the near term, the company no longer expects unit volume growth in 2019, and that has investors worried not just about the tire maker itself but about the auto industry more broadly.

Banner hanging from exterior of NYSE featuring Cooper Tires.

Image source: Cooper Tire & Rubber.

Insperity takes a hit

Human resources solutions provider Insperity saw its stock plunge 25% following the release of its second-quarter financial results. Revenue and earnings were both up double-digit percentages from year-ago levels, but even with CEO Paul Sarvadi being pleased with overall growth, Insperity didn't see quite as much hiring among the businesses in its client base, and that held back the services provider's own growth. If the economy does start to fall into a recession and hurt hiring activity, then the adverse trends that Insperity saw could get a whole lot worse in the near term.

Lexicon loses its partner

Finally, shares of Lexicon Pharmaceuticals plummeted 70%. The drugmaker said that partner Sanofi (NASDAQ: SNY) had decided to terminate the partnership between the two companies, which had had the goal of finding a drug that together with insulin would help patients with type 1 and type 2 diabetes. Sanofi's move came after it collected top-line results from studies involving the treatment Zynquista, which included the bad news that in two of those studies, the candidate treatment didn't reach statistical significance in improving blood sugar control among various patient groups. The decision means that Lexicon will have to find another way to fund further studies, and that'll be tough for the small drugmaker to achieve on its own.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.