Today's stock market
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Interest rates fell, sparking a rally in rate-sensitive stocks. Utilities rose, with the Utilities Select SPDR ETF (NYSEMKT:XLU) gaining 1%. Consumer staples stocks also benefited; the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) was up 0.9%.
As for individual stocks, Wal-Mart Stores (NYSE:WMT) was the biggest gainer in the Dow after having spurred optimism about its prospects at its investor day, and United Continental Holdings (NYSE:UAL) rose after reporting its latest operational metrics.
Investors go shopping for Wal-Mart stock
Wal-Mart presented its vision for succeeding in an increasingly online retailing world at its annual investor day, and Wall Street loved it, bidding up the stock 4.5%. The company reiterated its guidance for the current fiscal year, forecast growth next year, and announced a new share buyback program.
Wal-Mart continues to expect adjusted EPS for the year ending Jan. 31, 2018, to be in the range of $4.30 to $4.40 compared with $4.32 last year, and for fiscal 2019, it projects a 5% jump in EPS on a 3% increase in sales. Wal-Mart is authorizing $20 billion in new share buybacks, which amounts to about 8% of its current market cap, and expects to utilize it over a two-year period. Executives also outlined a strategy of cost controls through zero-based budgeting above the store level, competitive prices, and continued investment in e-commerce. The company said its capital spending will "continue to prioritize" store remodels and investments in technology and delivery options, rather than new stores.
In an era when investors are increasingly concerned about the prospects for companies competing with online titan Amazon, Wal-Mart has been impressing shareholders with relatively strong results, driving up the stock price 22% so far this year. Last quarter, its U.S. stores delivered comparable-store sales growth of 1.8%, its 12th straight quarter of positive comparable-sales gains. Today's presentations had observers convinced that the company's strategy is right on track.
United shares take off
United Continental provided an update today on its September operations that showed the impact of recent hurricanes, but the results were still better than observers had feared, and the stock jumped 4.7%. Revenue passenger miles fell 1.6% from September of last year, and available seat miles actually increased 1.7%. Onboard passengers fell 2.7%, but cargo revenue increased 14.6%.
Last quarter, United saw its revenue passenger miles increase by 4.3% and available seat miles rise 4.2%, so the September numbers were a significant drop-off from the airline's recent growth rate. But at a Deutsche Bank conference last week, company officials reported that Hurricane Harvey had shut down operations at United's Houston hub for over four days, and the ramp-up to full capacity took a full week, resulting in the cancellation of over 7,400 flights. Local demand was still being affected, so United said the impact would continue into the fourth quarter.
United will report third-quarter earnings Thursday of next week, but with the key operational metrics of all three months of the quarter announced, analysts were able to conclude that there isn't likely to be any unexpected bad news and that the long-term picture for the company remains positive. The market took the numbers as good news for the industry in general, and other airline stocks rose today as well.