What Happened in the Stock Market Today

Image source: Getty Images.

Stocks fell slightly on Wednesday, with both the Dow Jones Industrial Average (^DJI -0.11%) and the S&P 500 (^GSPC 0.02%) indexes finishing the trading session lower by less than 0.30%.

Today's stock market:

Data source: Yahoo! Finance.

Among the most popular exchange-traded funds, the Financial Select Sector SPDR Fund (XLF -0.02%), which has rallied sharply over the last six weeks, fell slightly. Meanwhile, the Direxion Daily Gold Miners Bull 3X ETF (NUGT 0.27%) has seen its volatility spike as gold prices slump in the wake of rising interest rates. Yet the leveraged fund ticked down by less than 1% on Wednesday.

As for individual stocks, Nike (NKE 0.66%) and FedEx (FDX -2.09%) stocks stood out with unusually large price moves on Tuesday.

Nike's brightening profitability outlook

Nike shares ticked up by less than 2% following the sports apparel titan's fiscal second-quarter report. A 6% revenue improvement to $8.2 billion beat consensus estimates, as did Nike's 11% boost in earnings to $0.50 per share (analysts were targeting $0.47 per share of profit). As expected, sales growth slowed slightly from the prior quarter. 

Image source: Nike.

Nike posted another dip in profitability, with gross margin falling by 1.4 percentage points to 44.2% of sales. The company had to address slowing sales growth in the U.S. market in part by cutting prices. Yet management believes its efforts to clear out excess inventory has finally put Nike in position to return to sustainable growth. "We now expect North America to continue growing in the second half of the fiscal year with a return to expanding gross margin and tighter inventory levels," Chief Financial Officer Andy Campion said in a conference call with investors. 

CEO Mark Parker and his team see profitability trends improving over the next six months, but remaining slightly negative year over year, which is a key factor behind Nike's underperformance in 2016. Looking forward, investors will be watching for signs of firmer pricing in the U.S. market and strong, innovation-driven sales in high-growth markets like China.

FedEx boosts spending

Package delivery specialist FedEx shed 3% after posting quarterly results that were affected by low economic growth rates around the world. The company posted declining profits in both its ground and freight segments as increased spending offset higher package volumes.

The ground segment saw operating margin shrink to 10.5% of sales from 13% under the weight of surging e-commerce delivery stress. The freight division endured a less pronounced margin dip to 5.5% of sales. FedEx's express segment, on the other hand, managed a 2% revenue uptick while operating margin held steady at 9.4% of sales. 

Image source: FedEx.

CEO Frederick Smith sounded an upbeat tone on the mixed results. "FedEx increased revenues and operating income despite continued low growth rates in the global economy," he said in a press release. "We are in the home stretch of our peak shipping season," he continued, "and our service levels are high, thanks to the outstanding efforts of our hundreds of thousands of team members around the world."

Profitability should eventually improve as the company rolls out price increases for 2017 and more fully integrates the new TNT Express business. But for the short term, at least, FedEx is likely to post falling operating margins as it spends heavily on expanding capacity, improving service, and bringing the TNT Express segment up to speed.