What Happened in the Stock Market Today

Microsoft and Starbucks stock stood out as indexes dropped on Friday.

Demitrios Kalogeropoulos
Demitrios Kalogeropoulos
Jan 27, 2017 at 6:14PM
Consumer Goods
Digital board of stock prices.

Image source: Getty Images.

Stocks ticked lower today, with both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) indexes declining by less than 0.1%.

Today's stock market


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Data source: Yahoo! Finance.

Gold-based ETFs attracted heavy investor interest as the price of the precious metal continues to bounce around. It rose on Friday, which helped send the VanEck Vectors Gold Miners ETF (NYSEMKT:GDX) up 2% and the leveraged Direxion Daily Gold Miners Bull 3X ETF (NYSEMKT:NUGT) higher by 4%.

As for individual stocks, dozens of companies saw elevated attention after posting their quarterly earnings reports ahead of Friday's opening bell. The reports from Starbucks (NASDAQ:SBUX) and Microsoft (NASDAQ:MSFT) made those stocks especially volatile.

Starbucks sets records as growth slows

Starbucks managed improved sales and profits over the holiday quarter, but that wasn't enough to impress investors as the stock fell 4% following its earnings report. The good news is that operating margin rose to 20% of sales for a quarterly record. Starbucks also logged a 7% jump in total operating profit, up to $1.1 billion. "The trust and confidence our customers have in the Starbucks brand is fueling our flywheel and propelling our business forward in markets and channels all around the world," CEO Howard Schultz said in a press release.

Coffee cup and coffee beans on a table

Image source: Getty Images.

Yet there were signs of stress on the business. Comparable-store sales growth fell to a 3% pace worldwide, down from 5% over the prior 12 months. A major contributor to that decline was falling customer traffic in the critical U.S. market that pushed comps there down to a 3% pace from 4% in the prior quarter. Executives noted that Starbucks still managed solid growth "in the face of a challenging environment for restaurant retailers overall."

Those challenges will apparently continue, as the company lowered its fiscal 2017 growth outlook to 9% at the midpoint of guidance from the 10% it had projected in early December. Despite the weaker outlook for the industry, Starbucks still plans to open over 2,000 new locations this year on its way to expanding its store base by 50% over the next five years.

Microsoft beats expectations

Microsoft was the best-performing stock on the Dow, up 2.35% on the day, after the software giant announced surprisingly strong earnings results. Revenue ticked up by 1% to $26.1 billion, while consensus estimates would have settled for closer to $25.3 billion. The tech titan also outperformed on profit, with $0.83 per share of earnings compared to expectations of $0.79 per share.

A line of servers

Image source: Getty Images.

The company enjoyed steady growth in its office commercial products and a 22% spike on the consumer side as the Office 365 subscriber base rose to 24.9 million from 24 million in the prior quarter.

Yet its cloud computing stole the show again, with a near-doubling of Azure revenue helping the intelligent cloud segment book 8% growth. "We see strong demand for our cloud-based services and are executing well on our long-term growth strategy," Chief Financial Officer Amy Hood said in a press release.

Microsoft's PC business shrank, pulled down by a slump in phone revenue, worse results out of the search engine business, and a slight decline in Xbox sales. Yet management is optimistic about its overall sales position. It forecast revenue of $23.5 billion at the midpoint of guidance next quarter, which beat Wall Street analyst targets that averaged $22.7 billion.