Firms with strong earnings escaped a broader decline among U.S. stocks while the effect of President Barack Obama’s bank restrictions, which weighed on the whole market, may be most pronounced in investors’ preference between big banks and regional bank stocks.
The S&P 500 closed down 24.72 points, or 2.21 percent. Technology and financial stocks declined the most. Of the 500 stocks in the index, 40 were up, 4 were unchanged, and 456 were down.
The five biggest winners of the S&P 500 today either released their quarterly earnings reports yesterday after the market closed or today before the market opened.
The biggest gainer was medical equipment giant Intuitive Surgical (NASDAQ:ISRG), which reported stellar results yesterday in after-hours trading. Fourth quarter revenues were $323 million, up 40 percent year-on-year and 15 percent quarter-on-quarter. Its earnings were $1.95 per share, beating the Wall Street expectations of $1.71 and up from the $1.27 figure a year ago.
The revenues and earnings per share for the year 2009 were also higher than last year’s. Almost all the measures of revenue and income across all sectors were up. Intuitive Surgical closed at $340.35, up 11.78 percent.
Huntington (NASDAQ:HBAN), a regional bank, reported earnings this morning. The bank had a loss of $0.56 per share for the fourth quarter and missed estimates. It did, however, strengthen its loan loss reserves and expects to return to quarterly profitability in 2010.
Although it missed expectations, Huntington was the second largest gainer on the S&P 500 behind Intuitive Surgical, gaining 3.54 percent. In contrast, some of the largest U.S. banks were among the biggest decliners. Other regional banks on the S&P 500 that finished higher for the day were Fifth Third (NASDAQ:FITB) and Suntrust (NYSE:STI).
Regional banks may not be adversely affected by President Obama’s proposals; they will not approach market-share caps and their revenues generally do not rely on principal trading and investments.
Other notable firms to avoid closing at a loss were General Electric (NYSE:GE) and McDonald’s (NYSE:MCD). Both firms reported solid earnings this morning.
Four of the five biggest losers on the S&P 500 also reported earnings either yesterday after the market closed or today before the market opened. The biggest loser was semiconductor giant AMD (NYSE:AMD, which beat estimates when it reported a loss of $0.08 per share. Net revenue, however, was down $400 million for the year. It closed down 12.27 percent.
The second biggest loser was Capital One (NYSE:COF). It reported earnings of $0.83 per share, beating estimates of $0.45. It did, however, report a lower revenue margin, higher marketing costs, and lower total revenue quarter-on-quarter. Investors may also be concerned about ongoing high unemployment and various new rules credit card companies must comply with by February 22.