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What Happened in the Stock Market Today

By Demitri Kalogeropoulos – Apr 26, 2017 at 4:57PM

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Chipotle and iRobot stocks caught investors' interest as indexes finished the day in the red.

After spending most of the session in positive territory, stocks dipped in the final hour of trading to end with slight declines. By the closing bell, the Dow Jones Industrial Average (^DJI 0.02%) and the S&P 500 (^GSPC 1.04%) indexes had each shed less than 0.25%.

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Data source: Yahoo! Finance.

Financial stocks led all sectors in trading volume, and the Financial Select Sector SPDR ETF (XLF) declined less than a tenth of a percent. Following two brutal daily declines to start the week, the Direxion Daily Gold Miners Bull 3X ETF (NUGT 4.81%) benefited from a small uptick in gold prices and logged a 0.6% increase.

As for individual stocks, Chipotle Mexican Grill (CMG 0.38%) and iRobot (IRBT 0.53%) both enjoyed market-beating gains as investors reacted to fresh quarterly earnings reports.

A ticker screen showing a mix of winning and losing stocks.

Image source: Getty Images.

Chipotle returns to growth

Chipotle shares rose 2.6% following a first-quarter report showing a recovery gaining steam for the burrito specialist. Comparable-store sales jumped nearly 18%, which helped overall revenue improve by 28% to $1.07 billion. Net income was $46 million compared to a $26 million loss a year ago.

Both of those figures look stronger in part because of an unusually weak prior-year period that included intense negative publicity following Chipotle's food-safety scare. Still, there were broad gains in several key operating metrics including customer traffic and average spending per customer despite higher menu prices. Decreased reliance on promotions combined with falling food costs to push restaurant-level operating margin up to 17.7% from 6.8% a year ago. "2017 is off to a strong start," CEO Steve Ells said in a press release. "[O]ur operations have improved every single month, which gives us confidence that we are on our way to achieve our mission," he continued.

Chipotle is still far from the 28.3% restaurant-level operating margin it enjoyed before the food safety scare sent customer traffic plummeting. In fact, increased food handling costs may mean it never hits that industry-thumping profitability level again. On the other hand, it appears customers are giving the fast-casual chain a shot at winning back their business, and Chipotle is capitalizing on the opportunity.

iRobot cleans up its outlook

iRobot stock jumped almost 16% after the robotic cleaning leader announced surprisingly strong quarterly earnings numbers. Revenue grew 34% in the U.S. consumer market that it dominates with its range of automated cleaning devices to help overall sales rise by 32%. Gross profit margin improved sharply as well, rising to 51.8% of sales from 47.4% a year ago.

A robotic vacuum at work.

Image source: Getty Images.

Executives said they were surprised by the strength of demand across its geographic segments. "Our first quarter results were outstanding," CEO Colin Angle said. "We are off to a great start in 2017 and tracking well to our near and longer term plans."

The robust sales pace convinced Angle and his team to raise both their top- and bottom-line forecasts for the year. They now see revenue climbing to between $780 million and $790 million from the prior projection of between $770 million and $785 million, which represents 19% annual growth at the midpoint. iRobot boosted its operating income target as well, and so Wall Street had to scramble to account for the improving sales and profit pictures by sending shares higher.

Demitrios Kalogeropoulos owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and iRobot. The Motley Fool has a disclosure policy.

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