Feb. 17 (Bloomberg) -- Companies in the Standard & Poor’s 500 Index posted their first-ever combined loss last quarter, dragged down by $1.1 trillion in bank write-offs and a 69 percent slump in oil.

Among the minority of winners: A regional bank and an energy company, along with a cancer-test maker and a blood screener.

Those four -- Hudson City Bancorp Inc., Southwestern Energy Co., Varian Medical Systems Inc. and Quest Diagnostics Inc. -- stand alone after the S&P 500’s worst year in seven decades, with 62 of 68 industries falling. They are the only companies that were profitable in each of the past 12 quarters, that saw earnings growth accelerate last year and that analysts predict will increase profits in 2009, according to data compiled by Bloomberg.

“Earnings are in short supply,” said Bill Stone, who helps oversee about $110 billion as chief investment strategist at PNC Wealth Management in Philadelphia, which bought 1.3 million Hudson City shares in October. “It drives people to look for companies that can produce. Even in good times that’s part of our discipline. It shows up more in this kind of environment.”

Companies in the S&P 500 lost a combined $10.34 a share in the fourth quarter, according to data and projections compiled by Howard Silverblatt, a New York-based S&P analyst. That’s the first loss for the index since 1936, when quarterly data begin, Silverblatt said.

$1.1 Trillion

Earnings at financial firms declined the most among 10 industries after lenders worldwide reported $1.1 trillion in losses, dragging the economies of the U.S., Europe and Japan into their first simultaneous recessions since World War II. Banks, brokers and insurers in the S&P 500 tumbled 57 percent last year.

The S&P 500 lost 4.6 percent to 789.17 today, extending last week’s 4.8 percent slump, as a record contraction in New York manufacturing spurred concern the government’s stimulus package won’t be enough to curb the deepening recession.

Hudson City Bancorp, based in Paramus, New Jersey, posted the biggest gain among S&P 500 bank stocks, rising 6.3 percent in 2008. The country’s second-largest publicly traded savings and loan increased net income for six straight quarters by making no subprime loans. Seattle-based Washington Mutual Inc., once Hudson City’s biggest competitor, declared bankruptcy in September after losing $45.6 billion on loans to the riskiest borrowers.

Instead, Hudson City focused on so-called jumbo loans, which had fewer defaults. The firm raised its dividend last month after fourth-quarter profit climbed 60 percent to a record. The stock dropped 26 percent in 2009 through last week, less than the 30 percent decline in the financials index.

‘Much Better Job’

“They’ve done a much better job than most in their credit underwriting,” Stone said. “If they hadn’t made good lending decisions, they’d be posting the same kinds of write-offs as other banks.”

About 150 S&P 500 companies increased earnings in the fourth quarter, according to data compiled by Bloomberg. Health-care companies and utilities led the gains, boosting profit 8.7 percent and 5.3 percent, respectively, even as the economy contracted by 3.8 percent, according to the Commerce Department.

The cheapest stock valuations in at least 18 years may push the S&P 500 up 45 percent this year, said James Paulsen, who helps oversee $220 billion as chief investment strategist at Wells Capital Management in Minneapolis. Paulsen’s projection depends on a rebound in the economy that helps revive bank profits.

“The earnings reports are being swamped by what is going on with the financials,” Paulsen said. “If you take away the financials, I don’t think anybody would be talking about the sky falling out of the universe.”

Cancer Test

Varian Medical, based in Palo Alto, California, boosted profit 24 percent. The company’s cancer-screening device helped it weather the recession as sales to hospital oncology departments climbed, according to Cindy Axelrod, an analyst at Glenmede Trust Co., which manages $16 billion in Philadelphia and owns the stock. While Varian Medical shares lost 33 percent in 2008, more than the 24 percent drop for the S&P 500 Health Care Index, it has gained 6.1 percent in 2009.

Quest Diagnostics, the world’s largest provider of medical testing, beat the health benchmark last year, losing 1.9 percent. The Madison, New Jersey-based company topped analysts’ profit estimates for seven straight quarters.

“I’m looking for companies that are insulated from the economic downturn with pricing power,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion and owns the shares. Quest generates a “fair amount of cash flow and their revenue stream is somewhat insulated from the economy. What’s not to like?”

Quadrupled Profit

Southwestern Energy, an oil and gas explorer based in Houston, reports fourth-quarter results on Feb. 26. The company quadrupled net income in the third quarter after increasing production 76 percent. The stock climbed 12 percent this year, compared with a 3.9 percent drop for the S&P 500 Energy Index, and was the only company in its industry that rose in 2008.

“It’s rare to find somebody with fundamentals that strong,” said Shawn Price, who manages $2.7 billion at Navellier & Associates Inc. in Reno, Nevada, and bought Southwestern shares last month. “Looking for positive sales growth and positive earnings, it gets real limited real fast.”

Price said the computer programs he uses to find stocks for his quantitative fund, which purchases companies with improving earnings, are showing the fewest names in his 18-year career.

“Right now it’s just decimation across the board,” he said. “The ones that do pop up are definitely getting a higher weight than they used to in the portfolio. We’re trying to separate the quality from the speculation.”

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: February 17, 2009 17:51 EST