Wednesday was a good day on Wall Street, as major benchmarks climbed toward record territory. Technology stocks had a particularly good showing, helping to send the tech-heavy Nasdaq Composite toward levels not seen since the turn of the millennium. An optimistic start to earnings season has lifted investor sentiment as well, and international stock markets are also performing better. Yet some individual stocks in the U.S. missed out on the rally, and United Continental Holdings (NYSE:UAL), Northern Trust (NASDAQ:NTRS), and McCormick (NYSE:MKC) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
United gets grounded
Shares of United Continental Holdings dropped 5% after the airline company announced its second-quarter financial results. United's headline figures for the quarter weren't bad, including a 6% rise in operating revenue to $10 billion and a nearly 40% gain in net income compared to the year-ago quarter. Yet on an adjusted basis, earnings growth was a more modest 5%, and declines in adjusted pre-tax margin figures offset some of the upward impact of a reduced number of shares outstanding at United. What investors didn't like was United's poor guidance for the summer quarter, which included flat passenger revenue per available seat mile and weaker margin figures than in the year-earlier period. With rival airlines still outperforming United operationally, investors are growing impatient with an improvement plan that still hasn't fully paid off for the stock.
Northern Trust falls despite rising dividend and buyback
Northern Trust stock fell 8% in the wake of the company's second-quarter earnings report. The wealth management and institutional financial provider saw net income inch higher by about 2%, and growth in fee income came largely from client asset growth under favorable market conditions. The results weren't as good as investors had hoped to see, and some stock analysts pointed to larger internal business costs and a decline in net interest income as holding back Northern Trust from stronger growth. Even though high-end-oriented financial giants like Northern Trust have done well compared to their more pedestrian peers, the challenges of catering to institutional clients makes maximizing profit far from simple even in a strong market environment.
McCormick deal leaves a bad taste in investors' mouths
Finally, shares of McCormick dropped 5%. The spice specialist announced a deal to buy the food business of London-based Reckitt Benckiser for $4.2 billion, which includes well-known brand names like Frank's RedHot hot sauce and French's mustard. The move puts McCormick in a much stronger position in the condiments category, complementing its leading role in spices, and McCormick CEO Lawrence Kurzius hopes that his company will now be able to convince its customers that it offers "a one-stop shop for condiment, spice and seasoning needs, providing our customers and consumers with an even more diverse and complete flavor product offering." Some worry that the price tag for Reckitt Benckiser Foods was too high, but the deal does put some spice into McCormick's less exciting steady-growth strategies of the past.