What Happened in the Stock Market Today

Image source: Getty Images.

Stocks ended lower on Monday, as weakness in the energy sector outweighed gains in tech shares. The Dow Jones Industrial Average (^DJI 0.56%) and the S&P 500 (^GSPC -0.88%) indexes each shed less than 0.5% at the start of a week that will see hundreds of companies post their fourth-quarter earnings results.

Today's stock market

Data source: Yahoo! Finance.

Volatile precious metal prices ensured that gold miners were once again some of the most heavily traded exchange-traded funds. VanEck Vectors Junior Gold Miners ETF (GDXJ 1.27%) rose 3%, and the leveraged Direxion Daily Gold Miners Bull 3X ETF (NUGT 1.91%) jumped 9% on the day.

As for individual stocks, Qualcomm (QCOM -2.36%) and McDonald's (MCD 0.37%) stood out, with unusually high investor interest.

Qualcomm's latest legal challenge

Qualcomm shares slumped by 13% following news that Apple is suing the company for $1 billion. It's not just the nine-figure restitution figure that makes this lawsuit risky for the chipmaker, though.

Image source: Getty Images.

After all, the iPhone maker is one of Qualcomm's largest customers, which makes this a different sort of challenge than the one that regulators at the Federal Trade Commission issued last week alleging potentially illegal business tactics aimed at imposing "anticompetitive supply and licensing terms on cellphone manufactures and to weaken competitors." Like the FTC, Apple is arguing that Qualcomm uses its dominant market position to force customers to pay both when they purchase its chips and through ongoing royalties as part of its licensing terms.

Qualcomm's licensing business is the main engine of its profitability. That segment churns a whopping 85% of sales into profit while the chip portion's margin is just 12%. The chipmaker has survived plenty of challenges to this patent-driven business model in the past. But this latest lawsuit shows an adversarial relationship with a key selling partner and comes at a particularly bad time, as Qualcomm is working to win regulatory approval of its proposed $38 billion acquisition of NXP Semiconductors.

McDonald's posts lower guest traffic

McDonald's shares ticked lower after the fast-food giant announced mixed results for its fiscal fourth quarter. Revenue improved overall, with comparable-store sales rising 2.7% to mark the company's sixth straight quarter of positive comps. On the other hand, the expansion pace was McDonald's weakest of the year. Comps rose by 6% to start 2016 before falling to a 3.1% pace in the second quarter and ticking up to 3.5% in the third quarter.

Image source: McDonald's.

The restaurant chain endured declining comps in the U.S. business this quarter as it passed a full year since rolling out an all-day breakfast initiative that goosed revenue results. Without a comparably large offering upgrade, it will be hard for Mickey D's to keep its expansion streak alive.

Executives said their focus in 2017 will be on growing guest traffic after two straight years of traffic declines. McDonald's served 3% fewer guests in 2015 and endured a 2.1% traffic drop last year. Yet executives believe a turnaround is achievable. "I am confident that we're on the right path as we pursue our goal of being recognized by our customers as the modern, progressive burger company," CEO Steve Easterbrook said in a press release. While they watch for evidence of that branding improvement, investors can expect increased cash returns headed their way as McDonald's completes its refranchising initiative that will see it whittle down corporate ownership to just 5% of restaurants -- down from 19% in early 2014.