This Is the Reason the S&P 500 Had Its Worst Day in Four Months
Oct 19th 2012 6:00PM
Updated Oct 19th 2012 6:16PM
Talk about a day of bad memories: 25 years ago today, the Dow Jones Industrial Average cratered 508 points in what still remains its worst percentage-loss in its history. Things weren't quite as horrendous today for the broad-based S&P 500 (INDEX: ^GSPC) , but the index did manage to turn in its worst single-day performance in four months, down 24.15 points (-1.66%), to end at 1,433.19.
Dismal earnings reports were the name of the game today, with multiple Dow and S&P 500 components failing to live up to lofty expectations.
McDonald's reported a 4% decline in overall operating income, as revenue decreased 0.4% on higher costs and weak comparable-store sales. Europe's debt crisis and food inflation costs have finally caught up with the golden arches -- a prediction that some people thought I was crazy to make one year ago. On a branding level, no other restaurant can compete with McDonald's, but the premium valuation it receives could still lend to more possible downside in the stock. Shares ended down 4.4% on the news.
Chipotle, on the other hand, had an even loftier valuation, and much more to lose from its miss. Quarterly EPS came in at $2.27, while showing 4.8% comparable-store sales growth, both falling short of Wall Street's expectations of $2.30 in EPS, and 4.9% comparable-store sales growth. Chipotle cautioned that consumers have been spending less on big orders and drinks, which is a trend that could continue into the future. Shares of the stock are providing the wrong kind of kick today, down near $43 per share, or 15%.
Advanced Micro Devices (NYS: AMD) took the dubious crown, yet again, of being the worst performing stock within the S&P 500, down another 17%, following a third-quarter earnings miss, the announcement of 1,800 job cuts, and a pair of analyst downgrades. The job cuts, which amount to about 15% of its workforce, demonstrate how serious the slowdown in PC sales has become. I'm not sure if AMD is going to catch any breaks anytime soon.
Banks continue to be the lone bright spot during this earnings season, with Capital One Financial (NYS: COF) shining bright, up 6%, after reporting positive third-quarter results. With the acquisition of both HSBC's U.S. card business and ING Direct, Capital One helped boost its total investments held to $203 billion, from $130 billion last year, and is attempting to neutralize some of its reliance on credit card returns. I'm not personally sold on Capital One's reliance on credit cards to drive growth, but it definitely deserves a pat on the back for today's performance relative to the market.
The important thing to remember on big down days like today is not to panic. That's why our analysts at Stock Advisor have taken the time to highlight three Dow dividends that they feel are must-owns for investors looking to escape the daily vacillations of the market. Click here and find out the identity of these three stocks, for free!
The article This Is the Reason the S&P 500 Had Its Worst Day in Four Months originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of McDonald's and Chipotle Mexican Grill. Motley Fool newsletter services have recommended buying shares of McDonald's and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.