Hospital Operators HCA, UHS Fall After Earnings

Major U.S. equities indexes were mixed on the final day of trading in a week dominated by a steady flow of earnings reports as well as increasing questions about how quickly the Federal Reserve will proceed with interest-rate reductions.

After trading in positive territory for much of the session, the S&P 500 lost ground in the afternoon to close with a minimal daily loss of less than 0.1%. The Dow was down 0.6%, while strength in the communication and technology sectors helped lift the Nasdaq to a record intraday high and a daily gain of 0.6%.

Shares of flooring manufacturer Mohawk Industries (MHK) plunged 13.7%, surrendering the heaviest decline in the S&P 500 in the wake of an underwhelming earnings report for the third quarter. Although sales and profit results fell largely in line with analysts’ expectations, Mohawk noted sluggishness in the flooring market as high interest rates, persistent inflation, and slumping consumer confidence weigh on the housing sector. On the bright side, the company says it expects interest-rate cuts in various geographies to help underpin a recovery next year.

HCA Healthcare (HCA) shares dropped 8.8% after the hospital operator’s third-quarter revenue and earnings per share (EPS) fell short of consensus forecasts. Although HCA maintained its guidance ranges for the full year, the company said results would likely come in toward the low end, reflecting a negative impact from Hurricanes Helene and Milton.

Fellow hospital company Universal Health Services (UHS) also disclosed quarterly results. Although revenue came in slightly ahead of estimates, profits were lower than expected. Increased corporate expenses related to debt refinancing and legal settlements weighed on the company’s performance during the quarter. UHS shares sank 9.8% on Friday.

Tapestry (TPR) shares soared 13.5%, gaining more than any other S&P 500 stock on Friday after a federal judge blocked the fashion holding company’s planned acquisition of luxury industry peer Capri Holdings (CPRI). The judge sided with antitrust regulators who argued that a combination of Tapestry—home to high-end brands Coach, Kate Spade, and Stuart Weitzman—with Versace and Michael Kors parent Capri would restrain competition in the luxury handbag market. Capri shares plummeted 48.8% following the court’s ruling. The companies said they would appeal the decision.

Footwear maker Deckers Outdoor (DECK) posted better-than-expected sales and profits for its fiscal second quarter, and its shares surged 10.5%. Sales of the company’s Hoka shoe brand increased nearly 35% year-over-year, while Ugg brand sales were up 13%. Direct-to-consumer (DTC) sales jumped nearly 20% from a year ago. In conjunction with the strong results, Deckers lifted its full-year sales forecast.

Strong quarterly results also helped lift shares of Digital Realty Trust (DLR), a real estate investment trust (REIT) that owns data center properties around the world. Digital Realty exceeded expectations with its funds from operations (FFO), an important gauge of cash flow for REITs. The REIT’s shares closed 9.6% higher on Friday.