For the second month in a row, factory orders fell, sliding 1.0% in September after falling 1.7% in August. But, for the second day in a row, investors dismissed disappointing economic numbers and justified bullishness based on assumptions that the Fed would do whatever is necessary to keep the rally moving.
When all was said and done, the S&P 500 finished the session at 2109.79, up 0.27%.
It wasn’t a winning day for all stocks, however. Sprint Corp. (NYSE:S), Fidelity National Information Services (NYSE:FIS) and American International Group Inc. (NYSE:AIG) all took sizable hits, bitten by the earnings bug. Here’s what happened.
Sprint (S)
Several weeks ago, Sprint led the cell phone service industry down an all-new path, introducing a leasing plan that allowed subscribers to always own the newest version of the iPhone by paying a monthly fee rather than outright selling the phone to iPhone fans.
Mathematically it was a honey of a deal for smartphone users. As the market has learned in the meantime, though, every dollar that’s not extracted from customers is a dollar taken off the top and bottom lines of the company’s quarterly results.
With that as the backdrop…
Last quarter, Sprint posted a loss of 19 cents per share on $7.98 billion in revenue. Both were worse than anticipated. Analysts had been calling for a loss of only 8 cents per share of S stock, and sales of $8.12 billion. The loss was an improvement on the loss of 19 cents per share in the same quarter a year earlier. But with revenue falling from the prior year’s comparable quarter revenue of $8.12 billion, the market is understandably having doubts that anything Sprint has done to attract customers is worth the cost and effort.
S stock closed down 7% for the session.
Fidelity National Information Services (FIS)
Sprint wasn’t the only stock to be up-ended by disappointing earnings numbers on Tuesday. Financial services technology provider Fidelity National Information Services also came up short of its third-quarter estimates, and FIS shareholders paid the price for the shortfall with a 12% tumble from the stock.
Last quarter, Fidelity National Information Services earned 90 cents per share on $1.58 billion in revenue. The pros, however, were calling for a bottom line of 91 cents per share of FIS and sales of $1.64 billion.
Still, it should be noted that Fidelity National posted an impressive improvement in income, and had it not been for an unusually strong U.S. dollar, FIS would have posted respectable revenue growth.
American International Group (AIG)
Finally, the 4% tumble American International Group shares took today may not have been one of the biggest tumbles taken among the market’s worst-performing stocks, but the AIG pullback was certainly one of the more interesting stumbles seen today.
Observers of the selloff will be quick to blame last quarter’s results for the move lower; American International Group earned 52 cents per share of AIG while analysts were expecting a profit of $1.03.
The more likely reason for the pullback, however, was news that the company didn’t agree with activist investor Carl Icahn’s assessment that AIG would be better off broken up into smaller pieces. Though it was an amicable rejection of Icahn’s premise that American International Group is too big to succeed, it also suggests that something of a distracting and destructive battle with the famed investor could be developing.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
