Image source: Getty Images.
Stocks declined on Wednesday as investors responded to increasing odds that the Federal Reserve will raise interest rates at its monetary-policy meeting in December. Both the Dow Jones Industrial Average (^DJI 0.43%) and the S&P 500 (^GSPC 0.57%) finished in the red -- but also above their session lows.
Today's stock market:
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
(0.43%) |
(77.46) |
|
S&P 500 |
(0.65%) |
(13.78) |
Data source: Yahoo! Finance.
Both the SPDR Select Financial Sector Fund (XLF -0.22%) and the VanEck Vectors Gold Miners (GDX 1.50%) ETFs saw heavy trading as the Fed announced its decision to leave interest rates in place for now while hinting at an expected increase next month. Officials said the case for a rate increase "continued to strengthen" over the past few weeks.
A few individual stocks managed gains even as broader indexes declined on Wednesday, including Yelp (YELP 0.30%) and Electronic Arts (EA -0.08%).
Yelp raises expectations
Business-review aggregator Yelp rose by as much as 17% on Wednesday before settling at a 10% increase. The company posted surprisingly strong third-quarter results before the opening bell that showed a 30% sales increase, as the local-business advertising market continues to shift online and toward its dominant platform. Yelp attracted enough new reviews to pass 115 user-generated critiques. Its push deeper into complementary business lines, such as restaurant reservations and food deliveries, is also showing promise: Transactions rose by 39% to 5.9 million.
Image source: Yelp investor presentation.
"We had an outstanding quarter," CEO Jeremy Stoppelman said in a press release. "We continue to pursue our mission of connecting consumers with great local businesses everywhere, and our local business in the U.S. has accelerated this year," Stoppelman continued.
Those gains aren't producing consistent profits yet. In fact, the company has lost money in three of the past four fiscal years. However, Yelp just logged its second straight quarterly profit gain and boasts a growing user base that's increasingly choosing to make transactions directly through its service. The question going forward will be whether Yelp can scale its business enough to bring costs down so that its adjusted profit margin rises from the 13% it saw last year to the 38% long-term target that management has laid out.
Electronic Arts sees a strong holiday quarter ahead
The surging demand for video games continues to surprise even the industry's biggest players. Electronic Arts' stock rose after the developer posted a 10% revenue bounce thanks to the popularity of its FIFA franchise, along with a 22% spike in its mobile gaming segment. Other good news for investors included solid initial engagement figures for the just-released Battlefield 1 shooter and a large improvement in gross profit margin, which rose by 5.5 percentage points to hit 55% of sales. EA's bottom-line $0.13-per-share loss beat the $0.17 per share of red ink that management forecast three months ago and marked a solid improvement over the prior year's $0.45-per-share loss.
Image source: Getty Images.
"Net sales in the quarter were better than expected, driven by outperformance in FIFA, and supported by strong year-on-year growth in mobile," Chief Financial Officer Blake Jorgensen said in a press release.
Looking ahead, a lot is riding on the developer's holiday season performance, especially as it relates to sales figures for its high-budget Titanfall 2 release. EA executives like their chances with that game, even though rival Activision Blizzard launches its newest chapter in the Call of Duty franchise later this week.
EA boosted its fiscal 2017 guidance on Wednesday and believes that, between Battlefield 1 and Titanfall 2, it will have a good chance at dominating the shooter category and perhaps knocking Call of Duty off the top spot for the first time in years.
