U.S. markets fell for the second straight session on Thursday, as investors continued to hastily react to Federal Reserve Chairman Jerome Powell’s comments following the central bank’s decision to keep interest rates unchanged.
On Wednesday, Powell explained in a post-meeting conference that the low inflation pressures in the economy may just be “transitory,” a key word that investors immediately reacted to with extreme selling since it indicates a rate hike may not happen in the near term. In fact, the S&P 500 neared an intraday high of 2,953 on Wednesday right before Powell’s press conference began. Once it started, the index tumbled more than 1% from that high to 2,923 by market close. It continued lower on Thursday, closing down 0.2% on the day.
And while the index on the whole declined, several companies endured losses far worse than the 0.2% average of all constituents. The biggest loser plunged just over 24%, shedding nearly one-fourth of its total market value.
Here are the three companies that were deepest in the red during Thursday’s session…
No. 3: Huntington Ingalls Industries Inc. (HII)
Shares of the largest military shipbuilder in the U.S. cratered 6.95% from $223.14 to $207.63, the worst close since March 29 when they settled at $207.20. Despite Thursday’s loss, HII is still up more than 9% on the year from the Dec. 31 close of $190.31.
Huntington shares experienced losses after the company released its first-quarter earnings report. The firm reported earnings per share (EPS) of $2.85, roughly 13% below Wall Street’s expected $3.27. Revenue was marginally better, as the company’s $2.08 billion earned in Q1 surpassed estimates by 7.24% and grew more than 11% year-over-year.
No. 2: Cognizant Technology Solutions Corp. (CTSH)
Cognizant – the information technology (IT) solutions giant headquartered in New Jersey – saw its shares fall from $72.18 on Wednesday to $66.60 on Thursday, making for a total one-day loss of 7.7%. That was the lowest close since Jan. 17 when CTSH stock settled at $66.55 per share.
Shares fell after the company reported lower EPS as well as weak earnings guidance for the fiscal year 2019. Although first-quarter revenue grew 5.1% year-over-year to $4.11 billion, EPS dropped 3.2% from $0.94 in Q1 2018 to $0.91 in Q1 2019. Cognizant additionally said that 2019 revenue would likely rise between 2.7% and 4.2%, far below the previous forecast of 6.3% to 8.3%. These financials likely panicked investors into thinking CTSH would be a weak long-term play, thus enticing them to sell their shares.
No. 1: Fluor Corp. (FLR)
The S&P’s single worst performer was Fluor, the largest engineering and construction company on the Fortune 500 with an interesting history of involvement in the Manhattan Project and Iraq War, among dozens more historic events. Shares of FLR crashed 24.1% on the day from $39.15 at Wednesday’s close to $29.72. That was the lowest settlement in more than 14 years and now puts Fluor stock down 7.7% on the year from the Dec. 31 close of $32.20.
Fluor’s dismal performance came on the heels of a devastating earnings report in which the top and bottom lines widely missed Wall Street’s expectations. The company reported a loss of $0.14 per share during the January-March period, miles away from analysts’ forecasted profit of $0.52 per share. Fluor also earned $4.19 billion in revenue during the first quarter, down 13% from $3.7 billion in the year-ago period and far short of Wall Street’s expected $4.79 billion. To make matters worse, the firm revised its full-year 2019 earnings forecast from $2.50 to $3 per share in February down to $1.50 to $2.
It’s difficult to pinpoint whether or not investors were scared off by the horrible earnings or by CEO David Seaton abruptly announcing he would step down without providing a reason. Seaton, a 34-year veteran with the company who had served as CEO for more than eight years, expressed that he would help Fluor’s chief legal officer Carlos Hernandez adjust to the job while other higher-ups search for a permanent replacement. When such a sudden change in management occurs, investors tend to think the company knows something that the market doesn’t, which urges them to dump their positions.