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What Happened in the Stock Market Today

By Demitri Kalogeropoulos - Updated Mar 1, 2017 at 5:13PM

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Office Depot surged and Palo Alto Networks sank as indexes soared higher.

Stocks had their best day of the year on Wednesday as the Dow Jones Industrial Average (^DJI -0.37%) raced past 21,000 points and the S&P 500 (^GSPC -0.26%) added over 1.25%.

Today's stock market

Index

Percentage Change

Point Change

Dow

1.46%

303.31

S&P 500

1.37%

32.32

Data source: Yahoo! Finance.

Financial stocks led the rally, with the Financial Select Sector SPDR ETF (XLF -0.82%) jumping 3%. Gold-focused exchange-traded funds also enjoyed market-beating gains; the Direxion Daily Jr Gld Mnrs Bull 3X ETF (JNUG -7.85%) rose 6% for the day.

Outside the stock exchange in New York.

Image source: Getty Images.

Office Depot (ODP -3.46%) and Palo Alto Networks (PANW -0.83%) were some of the biggest individual stock movers following significant surprises in the companies' quarterly earnings reports.

Office Depot's improving holiday quarter

Office Depot shares jumped 16.5% after the retailer posted encouraging, even if still negative, operating trends. Sales declined 2% to $2.73 billion over the holiday quarter, beating analyst expectations for a sharper drop to $2.71 billion. Gross profit margin ticked up to 24% of sales from 23.7% in the year-ago period. That improvement, plus the benefits of lower operating expenses, led to a solid earnings spike. Net income improved to $80 million from $15 million. After accounting for unusual charges, adjusted operating margin expanded to 4.1% of sales from 3% as both the retailing and business solutions divisions enjoyed higher profitability.

"The company made significant progress against its 2016 critical priorities and achieved substantial integration synergies" from the OfficeMax merger, CEO Gerry Smith said in a press release.

Smith and his team are projecting another year of declining sales ahead, primarily due to store closures. Executives believe the retailer will get closer to breakeven as 2017 progresses, though.

Meanwhile, the OfficeMax merger is paying dividends just as expected, with annual cost savings passing $750 million. The prospect for sales growth nearly a year off isn't particularly exciting, but it's better than many investors had feared, and so the stock recovered some of of its recent losses on Wednesday.

Palo Alto Networks' growth slowdown

Cybersecurity specialist Palo Alto Networks sank 24% after missing fiscal second-quarter growth targets and forecasting an even weaker short-term outlook. Sales rose by 26%, marking a slowdown from the prior quarter's 34% increase and falling outside of the 27% to 29% forecast range that management issued back in November. On the bright side, earnings were squarely on target, with non-GAAP net income rising 47% to $0.63 per share.

A visualization of cybersecurity.

Image source: Getty Images.

Executives suggested that the growth shortfall came from the mishandling of a few large contract deals that gummed up the new business pipeline. "We were disappointed that we came in below top-line expectations due to some execution challenges," CEO Mark McLaughlin said in a press release. Management is in the process of addressing those problems, McLaughlin explained.

Palo Alto Networks has its deepest-yet portfolio of next-generation security offerings, which should help it convince more IT managers to sign on for its protection services. Yet the company sees no quick growth rebound ahead. Sales are projected to rise by 17% to 20% as it works on improving contract execution in the fiscal third quarter -- far lower than the 31.5% spike that Wall Street was targeting.

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Stocks Mentioned

The ODP Corporation Stock Quote
The ODP Corporation
ODP
$30.40 (-3.46%) $-1.09
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,852.37 (-0.37%) $-115.45
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,821.62 (-0.26%) $-9.77
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund
XLF
$31.51 (-0.82%) $0.26
Palo Alto Networks, Inc. Stock Quote
Palo Alto Networks, Inc.
PANW
$516.84 (-0.83%) $-4.30
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares Stock Quote
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares
JNUG
$28.98 (-7.85%) $-2.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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