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What Happened in the Stock Market Today

By Jim Crumly - Oct 28, 2019 at 4:56PM

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The S&P 500 closed at a record, with AT&T rising after its earnings report and Tiffany soaring on news of a buyout offer.

The S&P 500 (^GSPC 0.10%) closed at a record high of 3,039.42 on Monday, up more than half a percent as companies reported earnings gains and investor optimism for a resolution of trade conflicts grew. The Dow Jones Industrial Average (^DJI -0.24%) also rose. The technology and communication services sectors led the market ahead of some important earnings reports.

Today's stock market

Index Percentage Change Point Change
Dow 0.49% 132.66
S&P 500 0.56% 16.87

Data source: Yahoo! Finance.

As for individual stocks, AT&T (T 0.19%) presented a three-year plan that appealed to investors, and Tiffany & Co. (TIF) received a buyout offer from LVMH Moet Hennessy (LVMUY -0.30%).

Outline of a bull superimposed on rising bar chart.

Image source: Getty Images.

Investors like AT&T's plans

AT&T reported mixed results for its third quarter, but presented a three-year capital allocation plan that was influenced by Elliott Management. The new road map received a warm reception from investors, and shares rose 4.3%. Revenue fell 2.5% to $44.6 billion, missing expectations for $45 billion. Earnings per share dropped $0.15 to $0.50, but on an adjusted basis climbed 4.4% to $0.94, $0.01 more than analysts were expecting.

The media giant continues to lose wireline and premium TV subscribers, but new wireless subscriptions and growth in AT&T fiber are helping to offset losses. The company also expects a boost when it unveils its HBO Max streaming service tomorrow.

AT&T announced plans to retire 70% of the shares it issued in the acquisition of Time Warner and to pay down all the additional debt it took on in the deal. Looking ahead to 2022, the company expects its dividend and share buybacks to yield shareholders about 8.5% per year, with EPS growth that would boost returns into double digits. It gave guidance for adjusted 2022 EPS of between $4.50 and $4.80, 32% above its projection for 2019.

That outlook, plus plans for new directors and a replacement for CEO Randall Stephenson after 2020, had investors applauding today.

Tiffany jumps on buyout offer

Tiffany investors received a nice gift today after the company confirmed it's received a buyout offer worth $14.6 billion from French luxury giant LVMH Moet Hennessy. Shares soared 31.6% to $129.72. The company said that the bid was an unsolicited, non-binding offer for $120 per share in cash.

LVMH acknowledged the deal in a terse press release but both companies are staying tight-lipped, which could indicate that acceptance of the opening offer is not at all a certainty. The fact that Tiffany stock closed well above LVMH's bid indicates that investors believe that the deal will eventually close with a higher price tag. In fact, various analysts weighed in after the news broke, with some suggesting that the company could be worth as much as $180 per share.

Tiffany has been struggling with declining sales, while the bigger and more diversified LVMH has been the far better growth stock recently.

Jim Crumly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,897.91 (-0.24%) $-82.41
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,278.15 (0.10%) $4.11
AT&T Inc. Stock Quote
AT&T Inc.
T
$18.45 (0.19%) $0.04
Tiffany & Co. Stock Quote
Tiffany & Co.
TIF
LVMH Moët Hennessy - Louis Vuitton, Société Européenne Stock Quote
LVMH Moët Hennessy - Louis Vuitton, Société Européenne
LVMUY
$142.52 (-0.30%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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