Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Steve Symington - Updated Feb 26, 2018 at 5:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On a strong day for the broader market, Berkshire Hathaway and Mattel traveled in very different directions.

The stock market rallied on broad-based strength on Tuesday, with both the Dow Jones Industrial Average (^DJI -0.90%) and S&P 500 (^GSPC -0.89%) clawing back to within 4% of their all-time highs set a month ago. When all was said and done, the two major market indexes had climbed 1.6% and 1.2%, respectively.

Today's stock market

Index Percentage Change Point Change
Dow 1.58% 399.28
S&P 500 1.20% 32.30

Data source: Yahoo! Finance.

Tech stocks led the way, with the Technology Select Sector SPDR Fund (XLK -1.28%) up 1.6%. But industrials weren't far behind, as the Industrial Select Sector SPDR (XLI 0.01%) fund jumped 1.4%.

As for individual stocks, Berkshire Hathaway (BRK.B -0.35%) (BRK.A -0.57%) stood tall as one of the S&P 500's top gainers following encouraging commentary from CEO Warren Buffett. On the other hand, a notable analyst downgrade left Mattel (MAT -2.05%) stock reeling.

Wall Street sign post with the word Exchange on a building in the background

Image source: Getty Images.

A tough road for this toymaker

Shares of Mattel initially plunged as much as 8.6% early today, then partially recovered to close down 3.4% after analysts at Jefferies Group downgraded shares of the toys and games specialist to underperform from hold. Curiously, Jefferies also increased its per-share price target on Mattel to $13 from $12.50. 

To justify its opinion -- and keeping in mind shares had rallied almost 9% this month in spite of disappointing holiday-quarter result from Mattel -- Jefferies stated that the company's ongoing turnaround is likely already priced into the stock, noting it faces "challenging industry conditions" and steep competition.

If that wasn't enough, on Friday credit-rating agency Fitch dropped Mattel's long-term issuer default rating by two notches to B+ from BB, arguing the Barbie and Fisher Price owner has suffered from its "inability [...] to effectively respond to evolving play patterns and ongoing retail challenges," particularly given the bankruptcy of Toys R Us late last year. 

To be fair, Mattel has moved to aggressively improve its financial position, with operational efficiency and expense-reduction initiatives targeting $650 million of cost savings in the coming years. Mattel has also struck new partnerships with companies including China-based Alibaba and computing platform Tynker to expand the reach of its brands and better monetize intellectual property.

It will take time, however, for those efforts to yield more tangible fruit. And given increasing skepticism for Mattel's prospects on Wall Street, it's no surprise to see the stock pulling back today.

Warren Buffett's latest windfall

Meanwhile, Class B shares of diversified financial holding company Berkshire Hathaway jumped 3.9% today after its CEO (and famed investor) Warren Buffett offered a slew of reasons to be optimistic for its future in his annual letter to shareholders. 

For one, Buffett says, Berkshire faces the enviable problem of finding the best ways to put its $116 billion cash pile to use. Berkshire has historically preferred to use its cash hoard for strategic acquisitions, which would add to its already enviable list of subsidiaries, including GEICO, General Reinsurance, Burlington Northern Santa Fe, Duracell, Dairy Queen, Fruit of the Loom, and dozens of other well-known brands.

But it's increasingly difficult to meet Berkshire's strict criteria for making such purchases at an astute price. As such, Buffett teased that Berkshire Hathaway would not be opposed to repurchasing its own stock at the right price. 

Finally, in an interview with CNBC today, Buffett reminded investors that the recent reduction of the federal corporate tax rate from to 21% from 35% is a "huge tailwind" for companies in the U.S. This means that Berkshire's already massive cash hoard will only continue to grow.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$408,722.25 (-0.57%) $-2,327.75
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$272.52 (-0.35%) $0.97
Mattel, Inc. Stock Quote
Mattel, Inc.
MAT
$22.48 (-2.05%) $0.47
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,749.96 (-0.90%) $-279.35
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,785.01 (-0.89%) $-33.82
The Select Sector SPDR Trust - The Technology Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Technology Select Sector SPDR Fund
XLK
$127.19 (-1.28%) $-1.65
The Select Sector SPDR Trust - The Industrial Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Industrial Select Sector SPDR Fund
XLI
$87.08 (0.01%) $0.01

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.