US Steel tumbles as investors seek more from tariff windfall www.bloomberg.com
U.S. Steel Corp. fell the most among peers as a mixed bag of quarterly results left investors wondering if they would see any real benefit from trade policies that have pushed up U.S. prices of the metal.
While the Pittsburgh-based steelmaker raised its 2018 earnings forecast after a better-than-expected second quarter, it gave a third-quarter projection that trails the average analyst estimate and kept dividends unchanged at 5 cents a share.
In a year in which Trump administration tariffs have helped fuel a 40 percent surge in domestic steel prices, U.S. Steel shares have lost ground even as most rival producers gain. The company, which is working to revitalize its aging facilities, has the lowest dividend yield among major rivals.
“Given the amount of cash coming from this company right now, I think people are getting a little impatient,” Seth Rosenfeld, a managing director at Jefferies in London, said by telephone. “If you think the macro economic outlook is untenable and you think demand could suffer because of these trade policies, you’re a lot less patient.”
For the third time in a row, U.S. Steel slumped after delivering earnings. The shares were down 9.8 percent at 11:57 a.m. in New York, heading for the biggest drop since it released first-quarter results.
Concerns about demand growth have been on the minds of investors throughout the earnings season. Caterpillar Inc. shares fell as investors worry that the full brunt of Donald Trump’s trade war is yet to hit the biggest maker of machinery for mining and construction at a time that some end-user industries may be reaching peaks in their growth cycles.
“The biggest risk to the U.S. market is demand begins to weaken, and if that’s the case then people will want to get their cash out beforehand,” Rosenfeld said.
(By Joe Deaux)
Published Date:2018-08-03