Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Jim Crumly - Oct 29, 2019 at 4:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Alphabet fell after reporting a decline in earnings, and Pfizer rose on better-than-expected third-quarter results.

Stocks zigzagged between gains and losses Tuesday as investors studied earnings reports and awaited the outcome of the meeting of the Federal Reserve tomorrow. The Dow Jones Industrial Average (^DJI -1.79%) and the S&P 500 (^GSPC -1.89%) closed modestly lower after being in the green for most of the session. Healthcare was the strongest sector and communications services was the weakest.

Today's stock market

Index Percentage Change Point Change
Dow (0.07%) (19.26)
S&P 500 (0.08%) (2.53)

Data source: Yahoo! Finance.

As for individual stocks, Alphabet (GOOG -3.26%) (GOOGL -3.37%) fell after reporting a profit decline, and Pfizer (PFE 1.00%) boosted healthcare stocks with strong third-quarter results.

Colorful montage of graphs.

Image source: Getty Images.

Higher costs drag down Alphabet earnings

Class C shares of Google parent Alphabet slipped 2.1% the day after the company reported earnings per share that came in below expectations. Revenue increased 20% to $40.5 billion, slightly ahead of the $45.3 billion analyst consensus estimate. Earnings per share fell 23% to $10.12, exceeding the 5% decline that Wall Street was expecting.

Chief Financial Officer Ruth Porat said on the conference call that revenue was driven by strength in mobile search, YouTube, and Google Cloud. Advertising revenue increased 17% to $33.9 billion, and "other" segment revenue -- which includes cloud, Google Play, and hardware -- grew 39% to $6.4 billion.

Analysts on the call probed for specifics on the cloud business that officials declined to provide. But Alphabet said that customer momentum was strong, and that head count growth in its cloud business was a primary driver for increased expenses in research and development and sales and marketing. Cost of revenue grew 31% largely due to rising data center costs and content acquisition for YouTube.

Although the EPS miss was substantial, the share-price decline basically just erased the stock's run-up during the week prior to the earnings release, as investors seemed to take the rising costs related to Alphabet's emerging businesses mostly in stride.

Pfizer's growth businesses excel

Pfizer reported better-than-expected third-quarter results and raised guidance, and investors boosted the shares 2.5%. Revenue fell 5% to $12.7 billion but was flat considering currency fluctuations and the spinoff of its consumer healthcare business. Adjusted earnings per share declined 2% to $0.75. The results beat analyst expectations for EPS of $0.62 on revenue of $12.3 billion.

Pfizer is preparing to spin off its Upjohn unit to Mylan, and elevating the Q3 results in the eyes of investors was the growth of what will remain with the pharma giant once that deal completes. That unit, Pfizer Biopharmaceutical Group, had 9% operational growth, boosted by a 30% increase in sales of oncology drugs. The Upjohn unit saw a 26% decline in revenue.

Pfizer raised its guidance for full-year adjusted EPS about 6% to a range of $2.94 to $3.00, citing an improved revenue outlook, lower cost of sales, and a more favorable product mix than had been anticipated.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$51.45 (1.00%) $0.51
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,158.67 (-3.37%) $-75.36
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,171.91 (-3.26%) $-73.22
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,473.31 (-1.79%) $-555.83
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,746.60 (-1.89%) $-72.23

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.