Wall Street tumbles, July 20-24

Weak corporate earnings and lower prices for commodities pushed down all three major U.S. indexes. The S&P 500 Index fell 2.2% to close at 2,079.65. The Dow Jones Industrial Average lost 2.9% to finish at 17,568.53, while the Nasdaq dropped 2.3% to 5,088.63. The spot gold price tumbled 3% to US$1,099.50 per oz.  

McEwen Mining was one of the week’s percentage winners, climbing 5% to US79¢ per share. On July 16, the company said its insurance reimbursed 80% of the fair value of the loss from a robbery at its El Gallo 1 mine in Sinaloa, Mexico. On April 7, armed robbers stole gold-rich concentrate containing 7,000 oz. gold, which at US$1,200 per oz. gold is worth over US$8 million. The financial impact of the robbery stands at US$1.6 million. El Gallo produced a record 17,325 equivalent oz. gold in the second quarter.  

Cameco shares rose 3% to US$13.40. The uranium producer will release its second-quarter earnings on July 30. Raymond James analyst David Sadowski estimates the company will report adjusted earnings per share of 22¢, in line with the average consensus. “We strongly encourage investors to bolster positions at current beaten-up levels on an improving macro uranium picture and ahead of the quarter, which should provide a reminder of Cameco’s robust cash flows,” Sadowski wrote on July 27. He says the upcoming nuclear reactor restarts in Japan should boost uranium prices.  

Diversified miner Teck Resources plunged 18% to US$7.09 per share. On July 23, the metallurgical coal, copper and zinc producer reported $63 million in earnings — a 21% drop from a year ago. Removing one-time items, adjusted earnings were $72 million, or 14¢ per share, beating the 11¢ per share that analysts on average had expected. However, given the weak coal markets, analysts are cautious of the company’s near-term profitability.

Intrepid Potash fell nearly 18% to US$9 per share, before releasing its second-quarter results on July 28. The fertilizer producer reported a US$4.9-million net loss compared to a US$5.6-million net income a year ago. The drop resulted from lower potash sale volumes and production levels.