Friday was an up-and-down day on Wall Street, with substantial gains early in the day giving way to downward pressure later in the session. Some major market benchmarks managed to hang onto their gains, but the Nasdaq Composite, and Russell 2000 indexes posted losses of 0.5% to 1.25%, and the S&P 500 was virtually flat. Rising bond yields pointed to many investors' ongoing anxiety about the current interest rate environment, as well as the prospects of the Federal Reserve further tightening its monetary policy later this year and in 2019.
Moreover, some subpar performances from key companies weighed on overall sentiment. Valero Energy (NYSE: VLO), eBay (NASDAQ: EBAY), and New Age Beverages (NASDAQ: NBEV) were among the worst performers on the day. Below, we'll look more closely at these companies to tell you why their stocks did so poorly.
Valero buys back its master limited partnership
Valero Energy dropped 10% after the refinery company announced that it would buy back all outstanding units of its related MLP, Valero Energy Partners (NYSE: VLP). Under the terms of the deal, Valero will pay unitholders of the master limited partnership $42.25 per unit in cash, putting a total value of $950 million on the deal. The MLP's unit price climbed on the day, given the premium that the refiner offered, but overall, investors were disappointed that the MLP structure that other players in the industry have used so effectively didn't work well in Valero's case. Also hurting the company was a downgrade from analysts at Goldman Sachs, who cut their rating on the stock from neutral to sell on fears that earnings could fall far short of what investors had anticipated due to tighter price spreads between various grades of crude oil.
Image source: Getty Images.
eBay could see disappointing results
Online marketplace eBay declined 9% in the wake of news that suggested that results from the just-ended quarter will come up short of expectations. The source of the information was payment processor PayPal Holdings, which eBay spun off several years ago. PayPal said that its own volume from eBay Marketplaces rose only slightly from year-ago levels; given that many eBay users also use PayPal, investors concluded that eBay's overall growth in gross merchandise volume likely slowed from its recent pace. That prompted analysts at Stifel to downgrade eBay from buy to hold, but shareholders will have to wait patiently for clarity until the e-commerce company's financial report comes out on Oct. 30.
New Age Beverages falls flat
Finally, New Age Beverages finished lower by 10%. The drink distributor has made its bid to join the legal marijuana craze by featuring a line of beverages that contain cannabidiol, a compound derived from cannabis that some believe has beneficial health effects. However, now that some of the hype from the official legalization of recreational cannabis in Canada earlier this week has passed, many marijuana-related stocks are taking a breather from their recent big gains. New Age Beverages will have to act quickly in order to turn its valuable promotional exposure into real business, and at least today, shareholders seemed less confident that the company will be able to get the job done.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends PayPal Holdings. The Motley Fool has the following options: short January 2019 $82 calls on PayPal Holdings. The Motley Fool recommends eBay. The Motley Fool has a disclosure policy.