Inspired by a modest recovery in consumer confidence for January, and emboldened by ongoing improvement in housing prices through December, the bulls took charge early on Tuesday and never let go. The S&P 500 finished the session at 1903.63, up 1.41%.
Not every stock participated in the bullishness, however. Waters Corporation (NYSE:WAT), Netflix, Inc. (NASDAQ:NFLX) and Huntington Bancshares Incorporated (NASDAQ:HBAN) each backpedaled… a couple of them significantly. Here’s what investors need to know about each slide.
Netflix, Inc. (NFLX)
While the initial response to last quarter’s numbers from Netflix was semi-bullish, the longer the market has to think about the bigger picture, the less it wants anything to do with NFLX. Today’s 1.2% dip from the stock caps off what’s now become a 12% dip from the post-earnings high.
Today’s round of selling largely stems from reports that Netflix is in the midst of an all-out bidding war against Amazon.com, Inc. (NASDAQ:AMZN) at this year’s Sundance Film Festival, spending big to secure access to new video content as soon as it goes digital. In another time and in a different situation, the aggressive posture would have been applauded by NFLX shareholders. With growth concerns of starting to surface, however — and still no significant profits in sight — some investors are seeing this bidding war as an expensive gamble.
The 1.2% pullback isn’t horrifying, but it is underscored by the fact that the market as a whole made nice gains on Tuesday.
Waters Corporation (WAT)
Last quarter’s results from Waters Corporation were good… they just weren’t good enough. The market was expecting an impressive beat, and when it didn’t get it, traders sent WAT shares 4% lower. Indeed, Waters was the worst large-cap performer for the day.
Waters Corporation — a pharmaceutical company — earned $1.96 per share on revenue of $586.6 million. Both were better than the expected profit of $1.95 per share of WAT on a top line of $581.9 million. Neither was good enough, however, to justify the debt that Waters must now shoulder following some recent acquisitions.
Waters Corporation also noted that currency and economic headwinds could linger into its fourth fiscal quarter.
Huntington Bancshares Incorporated (HBAN)
Last but not least, already sitting on a steep three-week selloff, Huntington Bancshares dished out even more pain today by virtue of the stock’s 8.4.% tumble following news that the company is acquiring FirstMerit. The deal would make HBAN Ohio’s biggest bank.
Investors clearly aren’t thrilled with the idea, however, and they haven’t been for quite some time. HBAN shares were already down 20% since the beginning of the year in anticipation of such news, and in lackluster response to a less-than-thrilling Q4 report… even though the bank topped estimates. The company doesn’t see interest rates moving officially higher anytime soon, which works against profitability.
Between the lethargic outlook and what could prove to be a pricey acquisition, HBAN was treated more like a liability than an asset today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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