Global markets declined again Tuesday, with the Dow falling nearly 550 points, reflecting increasing volatility that also is being felt by stocks of local importance: Shares of 12 of 15 companies tracked by Insider have fallen this month.
The Dow recovered most of its early losses on Tuesday but was still down about 100 points in mid-afternoon trading, and still had lost about 4.7 percent this month.
Two local stocks have gotten hammered this month, performing much worse than a year ago and somewhat worse than in October 2014 before the last midterm election.
Reasons for this month’s decline are difficult to pinpoint, investment analysts have told Insider, but include tightening financial conditions as a result of higher interest rates, geopolitical tensions, and companies lowering earnings forecasts even as they post solid third-quarter results.
Louisville-based startup Apellis Pharmaceuticals has lost nearly a quarter of its value this month, though primarily because of challenges in a clinical trial of one of its drugs.
But shares of some local companies have fallen without facing such challenges and before having reported third-quarter results. The stock price of Stock Yards Bancorp and Sypris Solutions each are down more than 10 percent this month. Stock Yards will announce earnings Wednesday.
Shares of Ford, Brown-Forman, Republic Bancorp, Churchill Downs and Turning Point Brands all are down more than 5 percent this month, while Humana, Texas Roadhouse, Yum Brands and UPS have seen declines between 4.3 percent and 2 percent. Only CafePress, Limestone Bancorp and Papa John’s have posted gains this month.
In the same period last year, the Dow had posted a gain of 3.9 percent, and shares of 12 of 15 local companies had risen, too. One of those that struggled last year was Papa John’s. Pizza sales were sagging, which eventually led to then-CEO John Schnatter blaming the anthem protests, beginning his falling out with the company’s board.
Shares of many local employers are now down compared to a year ago, with Stock Yards Bancorp, Sypris Solutions, Papa John’s, CafePress and Ford experiencing declines between 15 percent and 31 percent — though Texas Roadhouse, Humana, Churchill Downs and Yum Brands have posted double-digit gains in the last year.
In the October before the last midterm elections, in 2014, shares of local companies were mixed. The Dow posted a decline of 2.1 percent through the first 23 days of October in 2014, but about half Louisville-based companies posted gains. Papa John’s and Stock Yards Bancorp saw their share prices climb more than 4 percent, and Louisville’s largest employers — UPS, Ford and Humana — also posted solid gains.
But don’t fret too much about the current volatility. The period around midterms typically produces solid returns, according to Deutsche Bank analyst Binky Chadha, who noted that in the last 21 midterm years, the three-month period starting from a month before and ending two months after the election has produced a median gain of 8 percent for the S&P 500.