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Why JPMorgan Chase, Infinera, and CVR Energy Slumped Today

Dan Caplinger, The Motley Fool

The stock market performed badly on Tuesday, with major benchmarks finishing down anywhere from 0.5% to 1.6%. Adding to the list of concerns among market participants, signs of economic challenges in Italy brought back memories of past troubles in Europe that extended the length of time that the continent suffered from disruptions following the U.S. financial crisis in the late 2000s. Investors also had to deal with plunging oil prices that led to a flood of buying in the bond market, sending interest rates plunging lower. Bad news also affected several individual companies. JPMorgan Chase (NYSE: JPM), Infinera (NASDAQ: INFN), and CVR Energy (NYSE: CVI) were among the worst performers on the day. Here's why they did so poorly.

JPMorgan deals with a new reality

Shares of JPMorgan Chase finished lower by 4% after the Wall Street bank gave some downbeat news about how its second quarter has gone so far. A company executive said in a television interview that revenue from JPMorgan's trading operations is roughly unchanged from year-ago levels, disappointing those who had thought that increased market turmoil might bring with it an increase in the willingness among the bank's clients to take more aggressive positions. JPMorgan said that core trading is in fact doing better, but some extraordinary impacts from tax reform and accounting rules have created headwinds to offset the better environment. If Europe becomes a new problem and affects international markets, some fear JPMorgan might take a hit from those issues as well.

Three people in a lobby sitting in leather chairs in front of a Chase bank sign.

Image source: JPMorgan Chase.

Infinera deals with a downgrade

Infinera stock dropped 10.5% in the wake of a downgrade from an analyst company. Stock watchers at Jefferies cut their rating on the optical telecom equipment specialist from hold to underperform, arguing that a recent rise in its share price over the past several months already assumes an optimistic outlook on its potential growth. At the same time, competition in the optical space is rising, and analysts fear that rivals in the business could overtake Infinera over time. Comments from CEO Tom Feller earlier this month also suggested the possibility of a price war within the space. Even with the drop, though, Infinera is still up almost 40% since February.

CVR Energy makes a trade

Finally, shares of CVR Energy fell 9%. The holding company agreed to exchange its stock to investors in related entity CVR Refining (NYSE: CVRR), accepting as many as 37.1 million units at a ratio of 0.6335 shares of CVR Energy for every unit of CVR Refining exchanged. In a release, CVR Energy said that "many CVR Refining unitholders may wish to hold their investment in the form of common stock rather than partnership interests" after recent tax reform legislation. But it's unclear why CVR Energy would make an offer at a 25% premium rather than simply having CVR Refining convert to a corporate entity or use similar steps that wouldn't adversely affect CVR Energy shareholders for the benefit of CVR Refining unitholders. CVR Refining finished the session 8% higher.

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