What Happened in the Stock Market Today

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Stocks couldn't quite climb out of negative territory on Thursday, and both the Dow Jones Industrial Average (^DJI 0.69%) and the S&P 500 (^GSPC 1.20%) indexes finished with small losses as retailing and financial shares led the way lower.

Today's stock market

Data source: Yahoo! Finance.

The Financial Select Sector SPDR ETF (XLF 0.64%) fell 1% as investors prepared for a deluge of quarterly reports by the nation's biggest banks that begins late next week. Meanwhile, another pop in gold prices sparked a 17% jump in the Direxion Daily Gold Miners Bull 3X ETF (NUGT 3.17%).

Retailers were some of the most heavily traded individual stocks, though, and both Macy's (M 1.44%) and Costco (COST 1.01%) stood out with large price moves on Thursday.

Macy's slow Christmas

Macy's shares slumped by 14% after the department store chain announced weak holiday sales results while slicing its profit outlook. Comparable-store sales fell by 3% during the critical shopping month of December to just barely meet the low end of management's projection. Strong gains in its online properties of macys.com and bloomingdales.com weren't enough to offset poor customer traffic trends, the company explained. "Store sales continued to be impacted by changing customer behavior," CEO Terry Lundgren said in a press release.

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Macy's left its full-year sales outlook in place, but now believes it will hit the low end of its guidance range. Price cuts apparently played a big role in protecting that comps forecast, since Lundgren and his team now see full-year profits stopping at $3.03 per share instead of the $3.37 per share they had last targeted.

Separately, the retailer announced a new cost-cutting and restructuring plan that should save as much as $550 million in annual expenses through a mix of store closings and real estate sales. But the news didn't bring much comfort to investors who have every reason to expect slumping profitability as customer traffic declines continue.

Costco finds faster growth

Costco shares broke away from retailing peers to rise 2% after the company posted accelerating sales growth. Comps improved by 3% in December, it announced in a press release, up from a 2% pace in each of the past two months.

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The warehouse retailer's December results are notable for a few reasons. First, they show that Costco isn't feeling the same sales-growth pain that's sinking many of its retailing rivals. Second, the solid growth trends imply that the uptick in customer traffic that Costco saw last quarter continued into the critical holiday quarter. And finally, the comps improvement suggests that membership gains are back on track after its co-branded credit card switch caused a major drop in signups and renewal rates in fiscal 2016.

With sales growth headed in the right direction, it's possible that Costco might even be reclaiming the 4% customer traffic expansion pace that it enjoyed for six straight years before 2016's slowdown. The rebound also makes it more likely that the retailer will soon boost its annual subscriber fees for the first time in years. Since the company generates most of its profits from subscriptions rather than product sales, any increase in that membership price would produce a nice bounce in Costco's earnings.