Hot Stocks: Retailers decline; SHOP drops on layoffs; SHLX jumps on merger; TRU falls - Seeking Alpha

Summary

Stocks finished notably lower on Tuesday, amid concerns about corporate earnings and the Federal Reserve's upcoming interest-rate decision. The Nasdaq led the slide, falling by 1.9%.

The retail sector contributed to the decline, dragged down by a disappointing forecast from Walmart. The slide included notable losses from Kohl's (KSS), Macy's (M), Target (TGT) and Costco (COST).

Stocks finished notably lower on Tuesday, amid concerns about corporate earnings and the Federal Reserve's upcoming interest-rate decision. The Nasdaq led the slide, falling by 1.9%.

The retail sector contributed to the decline, dragged down by a disappointing forecast from Walmart. The slide included notable losses from Kohl's (KSS), Macy's (M), Target (TGT) and Costco (COST).

Shopify (NYSE:SHOP) represented another high-profile decliner. Reports of job cuts sent the stock sharply lower.

Elsewhere, TransUnion (TRU) dropped on weak earnings news, falling to a new 52-week low.

On the other side of the spectrum, Shell Midstream Partners (SHLX) jumped on news of a takeover deal. Meanwhile, Scholastic (SCHL) added to an earnings-inspired rally that began last week, reaching a fresh 52-week high.

Sector In Focus

A warning from Walmart and word of job cuts at Shopify sparked overall selling in the retail sector. Investors worried that high inflation and a weakening economy will force consumers to cut back on their spending.

With the general sector seeing a selloff, Kohl's (KSS) was one of the standouts to the downside. The stock dropped 9% on the session. Macy's (M) also helped lead the group lower, falling by 7%.

Target (TGT) retreated almost 4%, while Costco (COST) fell 3%.

Standout Gainer

News of a merger deal sparked buying in Shell Midstream Partners (SHLX). The stock jumped more than 10% after the firm agreed to be acquired by Shell USA (SHEL) in a deal worth $1.9B.

Under the agreement, SHEL will pay $15.85 for each SHLX unit that it does not already own. SHEL already holds a 68.5% stake in SHLX.

Boosted by the deal, SHLX closed at $16.05, an advance of $1.50 on the day. The rally added to gains posted earlier in the year. The stock has climbed 26% in 2022.

Standout Loser

Reports of large-scale layoffs prompted selling in shares of Shopify (SHOP). The stock retreated 14% on the news.

Citing an internal memo, the Wall Street Journal reported that the ecommerce platform plans to cut about 1K jobs, representing about 10% of its global workforce. The move comes as online shopping growth wanes, due to dissipating pandemic effects and a slowing overall economy.

SHOP dropped $5.34 to close at $31.55. The retreat took the stock back to the low end of a trading range that has held it since May. With losses posted earlier in the year, SHOP has now dropped 61% in 2022.

Notable New High

Scholastic (SCHL) extended a post-earnings rally that began last week. Shares climbed another 4% to reach a 52-week high.

Late last Thursday, the educational book publisher reported Q4 operating income that jumped 28% from the previous year on revenue that also grew by 28%. The firm projected revenue growth of 8%-10% for fiscal 2023.

In response to the quarterly update, SCHL soared nearly 13% on Friday. The stock added to its gains with another 3% advance on Monday. Tuesday's session saw another extension of the rally, with the stock rising an additional $1.86 to close at $44.84.

SCHL has now finished higher in eight of the last nine sessions. The stock has climbed 25% in the past month. With Tuesday's action, shares reached an intraday 52-week high of $44.87.

Notable New Low

TransUnion (TRU) lost ground following the release of its quarterly results, sending the stock to a new 52-week low. With the firm announcing disappointing revenue and a weak outlook, TRU dropped nearly 14%.

The data analytics firm announced quarterly revenue that jumped 30% from last year to reach $948M. However, the total came in shy of analysts' projections.

Looking ahead, the company predicted revenue for 2022 of $3.74B-$3.79B. Analysts were looking for a figure of around $3.85B.

Based on the quarterly report, TRU slumped to an intraday 52-week low of $75.03. Shares ticked off that nadir before the close, eventually ending the day at $75.52. This represented a decline of $12.08 on the day.

With the slide, TRU dipped below a recent trading range, extending the weakness seen earlier in the year. The stock has fallen 35% in 2022.

To see more than of the day's best- and worst-performing stocks, click over to Seeking Alpha's On The Move section.

Hot Stocks: Retailers decline; SHOP drops on layoffs; SHLX jumps on merger; TRU falls - Seeking Alpha
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