Stocks posted modest gains on Thursday, with the Dow Jones Industrial Average (^DJI 0.67%) and the S&P 500 (^GSPC 0.87%) indexes each finishing higher by less than 0.5%.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
0.27% |
56.09 |
|
S&P 500 |
0.37% |
8.69 |
Data source: Yahoo! Finance.
Financial stocks clawed back some of their significant losses from the prior session as the popular Financial Select Sector SPDR ETF (XLF 1.21%) tracked the broader market with a 0.4% increase. A near-1% drop in gold prices, meanwhile, sent the leveraged bullish bet on the precious metal, Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG -10.23%), down almost 10%.
As for individual stocks, Wal-Mart Stores (WMT 1.02%) and Cisco (CSCO -0.37%) made big moves following the companies' quarterly earnings report announcements.
Image source: Getty Images.
Cisco's shrinking outlook
Cisco shares dropped 7% after the networking titan met expectations for its fiscal third quarter but issued weak guidance for the quarter ahead. Sales in the latest period dipped 0.5% to $11.9 billion, which was in line with management's February forecast. Non-GAAP earnings edged past targets to land at $0.60 per share.
Growth in the switching segment was more than offset by declines in the routing, collaboration, and data center divisions. Cisco's gross profit margin slipped by nearly a full percentage point, but lower expenses helped produce improved profitability as operating income rose to 32.3% of sales from 30%.
Image source: Getty Images.
Management said it was happy with the financial results, which produced plenty of cash the company could direct toward growth areas like software and subscription services. "We executed well in Q3," Chief Financial Officer Kelly Kramer said in a press release, "delivering 11.9 billion in total revenue, while driving solid profitability and cash generation as we deliver on our strategic priorities."
Wall Street looked right past those solid results to focus on the company's forecast for the fourth quarter, which predicts sales declines of 6% to 4%. In a conference call with investors, Cisco explained that much of the drop is due to the move by customers toward subscription services, which is a long-term positive for the business. An apparent demand slowdown in the U.S. federal government segment is more worrisome, though, as it threatens to pinch annual results.
Wal-Mart's rising traffic
Shares of Wal-Mart gained 3% after the world's biggest retailer announced fiscal first-quarter results highlighted by encouraging sales growth. Customer traffic increased 1.5% in its U.S. locations, representing a slight acceleration from the prior quarter's pace. Wal-Mart's overall revenue improved by 1.4%, just missing consensus estimates, and earnings rose 2% to $1 per share, edging past Wall Street targets.
The company saw its biggest gains online, where gross merchandise volume spiked 69%. Wal-Mart now sells 50 million products on its website, compared to 10 million a year ago, and that competitive commitment is paying off through spiking revenue.
"We delivered a solid first quarter and we're encouraged by the start of the year," CEO Doug McMillon said in a press release. "We're moving faster to combine our digital and physical assets to make shopping simple and easy for customers," he added.
Thanks to improving traffic trends in both its physical and e-commerce properties, Wal-Mart believes its momentum is speeding up. For the quarter ahead, executives forecast a slight acceleration in growth as comps rise by between 1.5% and 2% at U.S. locations. At the same time, gross profit margin should hold steady, especially since the company is entering the quarter with a lean inventory position.
