Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Jim Crumly - May 16, 2018 at 5:13PM

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 day stocks moved higher, Macy's announced surprisingly strong sales and Tencent Holdings jumped after reporting earnings.

Stocks turned upward Wednesday, with the Dow Jones Industrial Average (^DJI 0.10%) rising a quarter percentage point and and the S&P 500 (^GSPC -0.28%) gaining even more.

Today's stock market

Index Percentage Change Point Change
Dow 0.25% 62.52
S&P 500 0.41% 11.01

Data source: Yahoo! Finance.

Retail stocks led the market in anticipation of earnings, with the SPDR S&P Retail ETF (XRT -2.34%) up 1.6%. Utilities lagged on falling bond prices; the Utilities Select SPDR ETF (XLU -0.27%) fell 0.8%.

As for individual stocks, Macy's (M -3.46%) helped kicked off the retail earnings season with good results, and Tencent Holdings Limited (TCEHY 1.88%) reported continued high growth.

Man climbing stairs surrounded by stock graphs.

Image source: Getty Images.

Macy's surges on sales gains

Shares of Macy's soared 10.8% to a new 52-week high after the company announced first-quarter results that soundly beat Wall Street expectations. Sales increased 3.6% to $5.54 billion, while earnings per share excluding asset sales and impairment charges came in at $0.42, up from $0.12 in the period a year earlier. Analysts were expecting the company to earn $0.35 per share on sales of $5.39 billion.

Comparable sales on an owned-plus-licensed basis jumped 4.2%, and after subtracting out the effect of shifting its "Friends and Family" sale from Q2 last year to Q1 this year, were still up a strong 1.7%. Online sales increased double digits, and gross margin improved from 38.3% last year to 39%.

Looking forward, Macy's expressed optimism about the year and raised its guidance. Total 2018 sales are now expected to range from a 1% decline to an increase of 0.5%, compared with earlier guidance of a decline of between 0.5% and 2%. Comparable sales are expected to increase between 1% and 2%, a bump of a percentage point. EPS guidance was raised $0.20 to a range of $3.75 to $3.95.

"Our first quarter performance reflects solid execution of our North Star Strategy, including merchandising and marketing activities," said CEO Jeff Gennette in the press release. "We also saw continued healthy consumer spending and significant improvements in international tourism."

The results and positive comments about consumer spending boosted the entire retail sector, and strengthened investors' belief in the company's turnaround.

Tencent rides growth in gaming, online services

Chinese online giant Tencent announced strong first-quarter revenue and profit growth that easily beat expectations, and the stock bounced 6.8%. Revenue jumped 48% to 73.5 billion yuan ($11.7 billion), well ahead of expectations of roughly 71 billion yuan. Net profit increased 61% to 23.3 billion yuan ($3.7 billion), while analysts were expecting only 17.5 billion yuan. Non-GAAP EPS came in at 1.915 yuan ($0.31), up 28% from the period a year earlier.

The strongest growth came from revenue from smartphone games, which was up 68%; online advertising, which grew sales 55%; and a 111% jump in revenue from "other businesses," which includes Tencent's payment solution business and related financial services, as well as its cloud services business. Net margin increased to 33% from 29% in Q1 last year.

"In the first quarter of 2018, we launched the popular tactical tournament mobile games and enhanced the capabilities of widely used services such as our Weixin Mini Programs, deepening engagement across our social, games and media platforms," said CEO Ma Huateng in the press release. "We drove adoption of our infrastructure services, seeing notable progress in areas such as mobile payment, cloud services, online financial services, and smart retail."

Despite decent results from Tencent last quarter, investors have been nervous about the company's intention to increase investments in 2018, as well being generally skittish over trade relations with China. The latest numbers show that growth and margins are quite healthy, and investors put aside their worries over trade for now.

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

Macy's, Inc. Stock Quote
Macy's, Inc.
$18.71 (-3.46%) $0.67
Tencent Holdings Limited Stock Quote
Tencent Holdings Limited
$46.51 (1.88%) $0.86
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$30,977.77 (0.10%) $30.78
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,810.92 (-0.28%) $-10.63
SPDR Series Trust - SPDR S&P Retail ETF Stock Quote
SPDR Series Trust - SPDR S&P Retail ETF
$59.76 (-2.34%) $-1.43
The Select Sector SPDR Trust - The Utilities Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Utilities Select Sector SPDR Fund
$69.12 (-0.27%) $0.19

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

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.