U.S. stocks rose on Wednesday after reports that Italy is planning to reduce its budget deficit starting in 2020 -- earlier than expected -- following a squabble with the European Union.
When the closing bell rang, the S&P 500 (SNPINDEX:^GSPC) had recovered yesterday's modest loss, and the Dow Jones Industrial Average (DJINDICES:^DJI) set another record high with its fifth straight positive session.
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The market's gain's were broad-based, though financials led the way, leaving the Financial Select Sector SPDR Fund (NYSEMKT:XLF) up 0.9%. Technology stocks also enjoyed positive momentum, with the Technology Select Sector SPDR Fund (NYSEMKT:XLK) climbing 0.3%.
As for individual stocks, General Motors (NYSE:GM) gained after scoring an enormous investment in its autonomous vehicles from Honda Motor (NYSE:HMC), and profitability concerns caused a steep decline for lighting manufacturer Acuity Brands (NYSE:AYI).
GM and Honda join forces
Shares of GM climbed 2.1% while Honda Motor fell 3.6% after the two companies announced a partnership with the goal of ushering in widely deployed autonomous vehicles.
Honda will contribute $2 billion over 12 years to the initiative, working jointly with GM and its Cruise self-driving vehicle subsidiary to "fund and develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of use cases and be manufactured at high volume for global deployment." Honda is also making a $750 million equity investment in Cruise, and the two industry giants will further move to advance the commercial deployment of the Cruise network.
Of course, Honda investors may lament that this deal appears to put the Japanese auto manufacturer in the back seat, while simultaneously speaking volumes for the industry leadership that GM Cruise has already secured.
In any case, if one thing seems likely, it's that the joint effort should serve to further accelerate the arrival and adoption of self-driving vehicle technology on a global scale.
Acuity Brands goes dim
Meanwhile, Acuity Brands fell 13.2% after the lighting manufacturer's strong fiscal fourth-quarter 2018 results were overshadowed by margin concerns.
Acuity's quarterly revenue climbed 11% year over year to a company-record $1.06 billion, which translated into 5% growth in adjusted (non-GAAP) net income to $2.68 per share. Analysts, on average, were only expecting earnings of $2.62 per share on revenue of $1.01 billion.
"Our fourth quarter performance was solid," stated Chairman and CEO Vernon Nagel, "particularly against the backdrop of a challenging lighting market where larger commercial projects remained soft and input costs rose significantly."
Nagel elaborated that many of those input costs -- including electronic components, freight, wages, and commodities like steel -- "experienced dramatic increases in price" during the quarter due to a combination of tariffs and wage inflation. In turn, they reduced Acuity's gross profit by over $20 million.
That said, the company believes it will be able to offset higher expenses with recently announced price increases. But it will likely need to endure a temporary delay before it realizes the fruits of those price increases.
Perhaps unsurprisingly, Acuity didn't provide specific forward financial guidance. Rather, Nagel insisted the company is "cautiously optimistic" for the new fiscal year, and remains well-positioned to drive modest top-line growth and improve profitability.
Given the uncertainty surrounding its impending cost headwinds, however, it's equally unsurprising to see investors punishing Acuity Brands stock today.