Stocks opened lower Tuesday as investors anticipate two days of testimony by Federal Reserve Chairman Jay Powell before Congress and start looking forward to second-quarter earnings reports. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) partially recovered late in the session to end with mixed results.
Today's stock market
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Cisco strengthens core optical hardware technology
Networking giant Cisco Systems announced it plans to acquire optical interconnect company Acacia Communications in an all-cash deal worth $2.6 billion. Shares of Acacia soared 35.1% to $64.91, while those of Cisco inched up 0.3%.
Cisco has agreed to pay $70 per share for the maker of high-speed optical fiber interconnect hardware for data centers and communications networks, a 46% premium over yesterday's closing price. The deal is expected to close in the second half of Cisco's fiscal 2020, which ends July of next year.
Cisco has been looking to its high-margin software and security businesses for new sources of growth, but recently has also moved to bolster its core hardware position in high-speed optics. Earlier this year, the company bought Luxtera to strengthen its position in 100 GHz and 400 GHz photonics technology for data centers. Acacia's technology will grow Cisco's optical system portfolio for high-speed networks as 5G starts to roll out, as well as support needs for handling large amounts of data in cloud infrastructure applications.
PepsiCo beats profit expectations
PepsiCo reported second-quarter earnings that beat profit expectations and maintained earlier guidance for the full year, and shares slipped 0.6%. Revenue inched up 2.2% to $16.45 billion, about in line with expectations. Earnings per share grew 12.5% to $1.44, and adjusting for currency fluctuations, non-GAAP EPS of $1.54 beat the analyst consensus of $1.50.
Correcting for currency, Pepsi's organic revenue growth was 4.5%, a bit of a deceleration from last quarter's 5.2% increase. Food and snacks led revenue gains in North America, with Frito-Lay posting 5% organic growth and Quaker Foods growing 3%, outpacing PepsiCo Beverages' 2% growth. Most of the gains in North America came from price increases, with beverage volume falling 2% and the two food divisions reporting 1% boosts in volume.
Investors may have been a bit disappointed by weak volume growth, but Pepsi officials were pleased with results and said that investments in making the company stronger were on track.