Tuesday was another lesson that rallies can be messy: Several oil and gas names that were the biggest winners on Monday were Tuesday's biggest losers.
The broader market ended the day in the red: The S&P 500 closed down 1.12%; the Dow Jones Industrial Average lost 0.64%; and the Nasdaq fell 3.68%.The price of West Texas Intermediate crude oil fell 3.7% and settled at $36.50 a barrel.
With the fall in oil prices came the fall of companies with exposure to them, and many were the biggest losers on the S&P 500. Murphy Oil (MUR) fell 14.65%, Chesapeake Energy (CHK) lost 17.78% and Southwestern Energy (SWN) dropped 14.67%. The recent rally in oil and gas companies has partly been attributed to traders covering their short positions during last week's rally in energy prices. Whether or not there is more to it remains to be seen as the fundamentals of these companies are still stretched with the price of oil below $50 a barrel.
Lumber Liquidators (LL) is back in the news almost exactly a year after 60 Minutes' report on high levels of formaldehyde found in the company's laminate flooring products. Famed short-seller Whitney Tilson was short on the company at the time of the report, though he covered his position in December after receiving information that suggested senior management was not aware of the problem.
"If this information is correct, then the company was sloppy and naive, but not evil," Tilson wrote in December.
Tilson announced on Tuesday that he was shorting the company again. The decision is in part due to new information from the Centers for Disease Control and Prevention that leads Tilson to believe the cancer risk in the laminate flooring product is even greater. Shares of Lumber Liquidators fell 15% on Tuesday.
Elsewhere, United Continental Holdings (UAL) captured attention on Tuesday after two shareholders, Altimeter Capital Management and PAR Capital Management, who together hold 7.1% of United's stock, nominated a slate of new directors to United's board. Among the nominees is Gordon Bethune, the former CEO of Continental Airlines.
"As long-term United stockholders, we have been greatly disappointed with United's poor performance and bad decisions over the last several years," Altimeter's Brad Gerstner said in a statement announcing the proxy contest. "Stockholders and employees deserve a proactive, well-crafted and diverse board that has the experience required to end years of chronic underperformance."
Shares of United fell 2.2% on Tuesday.
Dick's Sporting Goods (DKS) increased 0.50% after the company reported fourth-quarter earnings of $1.13 a share on net sales of $2.24 billion, representing a 3.7% increase from the fourth quarter of 2014.
"In 2016, we will continue to make strategic investments in our business to grow our leadership position in the industry and build meaningful momentum for 2017 and beyond," CEO Ed Stack said in the company's earnings release.
One of the those strategic investments could be tied to rival Sports Authority's recent announcement that it filed for Chapter 11 bankruptcy protection and that it was closing 140 stores.
In a call with analysts, management acknowledged that a lot of displaced market share is going to become available due to in part to the closure of Sports Authority stores.