Major benchmarks climbed on Monday amid optimism for an impending resolution to the U.S.-China trade war. Over the weekend, U.S. Commerce Secretary Wilbur Ross said the two countries are "very far along" with the first phase of a formal trade deal, adding that American companies should be granted licenses to resume sales of products to Chinese tech giant Huawei "very shortly."
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC -0.38%) gained roughly 0.4%, with both closing at record highs.
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But the rising tide didn't lift all boats. Among individual stocks, McDonald's (MCD -0.93%) and Under Armour (UA) (UAA -0.52%) badly lagged the broader market.
McDonald's just fired its CEO
Shares of McDonald's slumped 2.7% after the fast-food juggernaut terminated CEO Steve Easterbrook for violating company policy and "demonstrat[ing] poor judgment involving a recent consensual relationship with an employee."
Easterbrook took over as CEO in 2015, having previously implemented a turnaround as its global chief brand officer since 2013. In an email to employees on Sunday, he admitted he made a "mistake," adding, "Given the values of the company, I agree with the board that it is time for me to move on."
He'll be succeeded by Chris Kempczinski, who previously worked closely with Easterbrook on that turnaround as the president of McDonald's U.S. business.
Though this unexpected executive turnover might cause some angst among investors, Kempczinski told The Wall Street Journal yesterday that he doesn't foresee making any "radical, strategic shift" to McDonald's existing plans to rejuvenate sales growth at sluggish domestic locations.
Under Armour's accounting goes under the microscope
Meanwhile, Class C shares of Under Armour plummeted 18.4% after the athletic apparel and footwear specialist lowered its 2019 revenue outlook and confirmed its accounting practices are the subject of a yearslong federal probe.
The move lower came despite Under Armour simultaneously releasing stronger-than-expected third-quarter 2019 results. Revenue declined 1% year over year (but was flat on a constant currency basis) to $1.43 billion, exceeding consensus estimates for $1.41 billion. And earnings of $102 million, or $0.23 per share, easily beat analysts' average forecast for $0.18 per share.
But Under Armour also told investors it now anticipates full-year 2019 revenue to be up around 2%, marking a reduction from its previous outlook for 3% to 4% growth. The company blamed a combination of amplified foreign-currency headwinds, "ongoing traffic and conversion challenges" at its direct-to-consumer business, and lower-than-planned excess inventory to meet demand from its "off-price channel."
If that wasn't enough, Under Armour confirmed it has been responding to requests since as early as July 2017 from both the U.S. Securities and Exchange Commission and the Department of Justice regarding its accounting practices. The company insists, however, that it "continues to believe its accounting practices and related disclosures were appropriate."