On July 26, United States Steel Corporation shares increased 7.2% following the release of the company’s second-quarter earnings. For a while there, investors were feeling extremely optimistic about the stock. However, thanks to the latest comments from President Trump, all of that changed today.
According to Chris Olin of Longbow Research, comments from President Trump regarding his ongoing investigation into U.S. steel imports this week have taken the wind out of U.S. Steel Corp’s (NYSE:$X) sail.
With this, on Thursday, July 27, Olin downgraded U.S. steel and competitor AK Steel Holding Corporation (NYSE:$AKS) from ‘Buy’ to ‘Neutral’ after President Trump said potential restrictions on U.S. steel imports would be put on hold while Republicans focus on high priority issues.
As a result, Olin now sees a 50% probability of a positive outcome from the investigation President Trump initiated. This is significant as it is down from a 70% chance a month ago.
“The uncertainty on the Trump administration steel import policy was reflected in modestly slower steel activity,” Olin said. “Over the past few days, industry contacts suggested the channel returned to ‘business as usual,’ with customer orders and price expectations turning flattish.”
For the time being, Longbow has recommended that investors focus more on mini-mill names, like Steel Dynamics, Inc. (NASDAQ:$STLD) and Nucor Corporation (NYSE:$NUE).
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