Wall Street bounced back on Wednesday morning, posting modest gains as investors started to feel more hopeful about the prospects for a favorable trade deal going into the weekend's G-20 meeting. Treasury Secretary Steve Mnuchin gave an upbeat assessment of the current status of negotiations between the U.S. and China, and although market participants know all too well that they've faced disappointment in similar situations in the past, they're optimistic that a deal will boost the global economy. Just after 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was higher by 56 points to 26,604. The S&P 500 (SNPINDEX:^GSPC) picked up 5 points to 2,923, and the Nasdaq Composite (NASDAQINDEX:^IXIC) climbed 51 points to 7,936.
The height of earnings season is still a month away, but there are high-profile companies that report in the interim. Today, Micron Technology (NASDAQ:MU) delivered interesting news from the semiconductor sector, while General Mills (NYSE:GIS) provided a different outlook on how the economy is performing and what investors should expect in the weeks and months to come.
Micron gets up off the mat
Shares of Micron Technology were higher by 14% Wednesday morning after the chipmaker announced its fiscal third-quarter results late Tuesday. Although the results reflected a sharp drop in demand compared to year-earlier levels, investors were happier with Micron's outlook and prospects for a recovery.
Micron's headline numbers were downright ugly. Revenue plunged 39% compared to the year-earlier quarter, and adjusted net income fell an even more precipitous 69%. The declines were consistent with what the company has seen in past quarters, but it continued a trend that investors are becoming increasingly uncomfortable seeing.
Yet Micron shareholders tried to take comfort in comments that the company made about the future. Even with trade-related restrictions, Micron said it has started to make some shipments to China's Huawei, with CEO Sanjay Mehrotra having seemingly found some sort of workaround. Moreover, some of its projections for improvement in the near term convinced some of those following the stock that the chipmaker will succeed in seeing memory prices and other key market benchmarks improve.
Micron's immediate guidance suggests further weakness, with revenue falling further to between $4.3 billion and $4.7 billion with earnings of $0.38 to $0.52 per share. Even so, those numbers aren't as bad as some had feared, and that's enough to help the struggling stock bounce back at least for a single day.
Organic growth evades General Mills
Meanwhile, shares of General Mills fell more than 5%. The maker of cereal and other food items reported fiscal fourth-quarter results that didn't live up to investor expectations.
At first glance, General Mills' numbers looked encouraging, with revenue growth of 7% for the quarter. However, just about all of the gain came from the acquisition of Blue Buffalo Pet Products, which left General Mills' organic sales with a decline of 1% compared to year-earlier levels.
The food giant faced a host of challenges during the period. Pricing pressure in the North American retail segment led to a 2% drop in reported net sales there, while currency pressures in Europe, Asia, Australia, and Latin America all contributed to volume weakness in General Mills' international markets.
To its credit, General Mills did identify the need to get back onto a growth trajectory. CEO Jeff Harmening expects greater innovation and brand-building in the coming fiscal year, with financial efforts aimed at reducing leverage levels. Yet with tepid sales growth of 1% to 2% anticipated for fiscal 2020, General Mills will have to hope that investors will remain patient long enough for the company's plans to take shape. Otherwise, the stock could remain under pressure for some time.