BOSTON (TheStreet) -- Investor confidence in the equities market was eroded in the second quarter as Americans shifted out of stocks and in to the relative safety of fixed-income investments.That resulted in a 5.5% tumble for the S&P 500 in the period, on the heels of a 12% first-quarter gain. It's not just the conundrum that is the European sovereign debt crisis that worries investors, it's also the struggling domestic economy, the outcome of health-care reform and the nation's ultimate direction, given that it's a presidential election year. And the outlook for stock investors isn't likely to be clarified any time soon. "Investors continue to confront the paradox of a three-year-old subpar U.S. economic recovery that is generating record levels of quarterly corporate earnings, but is producing extremely low levels of investor confidence," say S&P Capital IQ analysts. "As a result of the low growth, the U.S. economy is more vulnerable than normal to external negative influences." The energy sector is the biggest loser in the second quarter, down almost 12%. Financials are down about 8%, with the industrials, materials and information technology industries not far behind, all with declines of just over 7% in the period. Two energy industry companies turned in some of the worst performances in the second quarter, although they're at different ends of the spectrum when it comes to power generation. The biggest loser in the S&P 500 in the quarter is coal miner Alpha Natural Resources ( ANR), down 46%. Investors bailed out of its shares, knowing that there is a huge supply of coal on hand at utility power stations after a mild winter. Longer term, it is clear that natural gas, which is at record low prices now, is increasingly going to be replacing coal as an energy source for utilities.
Shares of solar power module maker First Solar ( FSLR) declined 37%, as concerns rose over its viability and the profitability of its business line due to increased competition from China and decreasing government subsidies for solar energy products. High-end retailers have also been hurt by Europe's economic weakness as they've seen a decline in demand due in part to high unemployment and the slipping value of the euro. Losers include quirky fashion accessories seller Fossil ( FOSL), down 41%, the second-worst performance in the S&P 500 in the quarter, and upscale clothier and retailer Abercrombie & Fitch ( ANF), down 38%. Here are the 10 worst-performing stocks in the S&P 500 in the second quarter, ranked from least to worst share-price decline:
8. United States Steel ( X) Company profile: U.S. Steel, with a market value of $2.7 billion, is the second-largest steel company in the U.S. and among the top 20 globally. Investor takeaway: Its shares declined 35% in the second quarter and 27% this year. Morningstar analysts say "steel stocks have been whipsawed by economic conditions in Europe and China, and we don't believe strategic initiatives or domestic market conditions will move the needle until more clarity develops around global economic stability and growth." 7. J.C. Penney ( JCP) Company profile: J.C. Penney, with a market value of $4.7 billion, is a national department store chain with more than 1,100 stores nationally. Investor takeaway: Its shares tumbled 36% in the second quarter and 37% this year. The company announced both a new pricing strategy in which it slashed prices by as much as 40% as well as a corporate restructuring in February but faces economic headwinds. S&P says that "given a tepid economic recovery, a cautious moderate-income consumer and intense competition, we do not see business materially improving until fiscal 2014 at the earliest." 6. First Solar ( FSLR) Company profile: First Solar, with a market value of $1.3 billion, makes solar modules and constructs turnkey solar systems. Investor takeaway: Its shares plummeted 37% in the second quarter and 55% this year. S&P says there is "deteriorating fundamentals, potential downside to consensus estimates, and management turnover," as well as government incentive reductions and more challenging financing conditions impacting demand internationally.
3. Netflix ( NFLX) Company profile: Netflix, with a market value of $3.7 billion, rents DVDs and provides a video-streaming service delivering digital content to PCs, Internet-connected TVs, and consumer electronic devices throughout North America, parts of Europe and South America. Investor takeaway: Its shares tumbled 41% in the second quarter and 3.3% this year. "The transition from DVDs to digital delivery levels the playing field for Netflix's competitors," says Morningstar analysts, while content providers that Netflix relies on for product may decide to keep tighter control on them or distribute through their own channels. But the "recent selloff appears somewhat overdone to us," S&P says, based on the view that it is "well-positioned to benefit from an exponential global growth of streaming video consumption." 2. Fossil ( FOSL) Company profile: Fossil, with a market value of $4.6 billion, designs and sells fashion watches and other accessories for distribution in department stores in over 100 countries. Investor takeaway: Its shares dropped 41% in the second quarter and 6.8% this year. Its recent share-price performance has been hurt by concerns over Europe, where same-store sales fell 5% in the first quarter." 1. Alpha Natural Resources ( ANR) Company profile: Alpha Natural, with a market value of $1.7 billion, is the nation's third-largest coal producer. It is noted for its high-quality coal and relatively high operating margins. Investor takeaway: Its shares tanked 46% in the second quarter and 61% this year. No analyst gives the stock a "sell" rating. S&P analysts say: "Current coal fundamentals are poor, reflecting high stockpiles at U.S. power producers after a mild winter and switching by utilities to natural gas due to near record low natural gas prices. Given the increased production of natural gas in the U.S., we expect switching and depressed pricing to continue."