U.S. stocks declined on Friday, extending yesterday's losses as rising Treasury interest rates overshadowed an encouraging September jobs report. All told, the Dow Jones Industrial Average (DJINDICES:^DJI) fell another 0.7%, while the S&P 500 (SNPINDEX:^GSPC) dropped a more modest 0.6%.
Today's stock market
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Tech stocks led the market lower once again, leaving the Technology Select Sector SPDR ETF (NYSEMKT:XLK) down 1.2%. But consumer staples names largely resisted the broader downturn; the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) edged just into negative territory at the close.
As for individual stocks, Snap (NYSE:SNAP) endured a particularly volatile session following a leaked internal memo, while disappointing preliminary results sent shares of IPG Photonics (NASDAQ:IPGP) south.
Snap plans for profitability
Shares of Snapchat parent Snap initially rose more than 5% in pre-market trading, but gave back their gains to close down 0.4% after a leaked internal memo revealed the company is targeting sustained profitability for next year.
According to a memo to employees obtained by Cheddar, CEO Evan Spiegel wrote that Snap has not only "made remarkable progress this year executing toward [its] stretch goal" of a breakeven fourth quarter, but also set a goal to achieve accelerated revenue growth and profitability for the full-year 2019.
Spiegel further admitted that Snap "rushed" the recent redesign of its flagship app, "solving one problem but creating many others."
The timing of Spiegel's thoughts is no coincidence; Snap shares plunged more than 5% to an all-time low on Thursday after multiple analysts downgraded the stock. Those downgrades included a note from Evercore's Anthony DiClemente, who argued that Facebook's Instagram is "irreversibly reducing" Snap's ability to live up to investors' longer-term expectations.
In the end, it's encouraging to see Spiegel lauding Snap's recent progress and outlining its ambitious long-term goals. But until investors have more concrete results indicating that those targets are achievable, I suspect the stock will remain under pressure.
IPG Photonics' underwhelming update
IPG Photonics stock plunged 13.8% after the high-performance laser manufacturer announced weaker-than-anticipated preliminary third-quarter 2018 results.
IPG now expects quarterly revenue in the range of $355 million to $356 million, down from its previous guidance (provided in July) for $360 million to $390 million. On the bottom line, that should translate into earnings per share of $1.83 to $1.87, also well below IPG's prior outlook for an EPS range of $1.80 to $2.05.
"The global geopolitical and macroeconomic environment remained challenging as we progressed through the third quarter," explained IPG Photonics CEO Dr. Valentin Gapontsev. "These tariff and trade-related headwinds were the primary driver of weaker than expected performance for our business in China and Europe."
As such, Gapontsev added that IPG's full-year revenue "may" arrive below the company's previous guidance for 7% to 9% growth. But investors will need to wait until IPG reports its final third-quarter results in late October for a revised full-year outlook.