Stocks wavered between slight gains and minor losses on Wednesday as earnings season gave investors plenty of new information to digest. The Dow Jones Industrial Average (^DJI -0.12%) ticked lower while the S&P 500 (^GSPC -0.58%) posted a tiny increase.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
(0.18%) |
(35.95) |
|
S&P 500 |
0.07% |
1.59 |
Data source: Yahoo! Finance.
Financial stocks took another step lower, which pushed the popular Financial Sector SPDR Select ETF (XLF 0.25%) down 0.7%. Yet the fund is still up nearly 20% since the beginning of November.
On the other hand, gold prices ticked up to generate a 3% increase in the leveraged bet on the precious metal, Direxion Daily Gold Miners Bull 3X ETF (NUGT 3.17%).
Image source: Getty Images.
As for individual stocks, Walt Disney (DIS -0.83%) and Akamai Technologies (AKAM -0.98%) both attracted heavy investor interest following their first quarterly reports of 2017.
Disney's Star Wars hangover
Disney shares held near-record highs following the entertainment giant's quarterly earnings report. As expected, results slipped on both the top and bottom lines, with sales falling 3% to $14.8 billion and earnings dropping by 10% to $1.55 per share.
The media networks division continues to struggle as the base of pay-TV subscribers trends lower, especially at its ESPN franchises. But the bigger drag on results came from huge declines in both the consumer products and studio segments, as Disney booked 23% lower product sales and a 7% drop in the studio business.
Image source: Disney.
The slump can be pinned on a prior-year period that was lifted by record demand in both areas due to the release of Star Wars: The Force Awakens. Considering that brutal comparison, management was happy with the broader results. "We're very pleased with our financial performance," CEO Bob Iger said in a press release. "Our parks and resorts delivered excellent results and, coming off a record year, our studio had three global hits including our first billion-dollar film of fiscal 2017, Rogue One," he continued.
Because of the unusually strong prior-year results, Iger and his team believe Disney will take a step back in 2017 after posting six straight years of record results. But they aim to quickly recover momentum in fiscal 2018 thanks to a packed pipeline of theatrical releases, including the next major installment in the Star Wars franchise.
Akamai lowers profit expectations
Shares of content delivery tech specialist Akamai Technologies dropped 10% after it posted surprisingly strong quarterly results but forecast weaker profit growth ahead. Revenue and earnings both rose 6% to exceed the targets laid out by CEO Tom Leighton and his executive team. "Our strong results were driven by robust seasonal traffic, continued rapid growth of our cloud security solutions and the success of our recently launched new products," Leighton said. Revenue growth tilted toward international geographies, with U.S. sales ticking up by 2% as the non-U.S. business jumped 18%.
Image source: Getty Images.
Yet with the stock up over 60% in the year heading into this report, Wall Street was apparently hoping for a more aggressive outlook from Akamai. Instead, executives projected shrinking profitability in 2017 as the company ramps up investment spending in areas like cloud security and enterprise solutions.
This outlay will push adjusted profitability down to the high 30% range "for the foreseeable future," management explained in a conference call with investors, compared to the 41% the company managed in each of the last two years. The payoff should be a growth acceleration to double-digit revenue gains over the long term, but the most immediate effect will be slightly lower profits in the coming quarters.
