Major benchmarks didn't make significant moves Wednesday morning, treading water near their all-time high levels from earlier in the week. Without any new developments on key issues like economic conditions or trade negotiations, investors were left looking for subtler signals about where the stock market might go from here. As of 11:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 12 points to 27,505. The S&P 500 (SNPINDEX:^GSPC) rose 1 point to 3,075, but the Nasdaq Composite (NASDAQINDEX:^IXIC) was lower by 24 points to 8,411.
Many companies are looking at various strategic moves to try to improve their prospects for growth, and Xerox (NYSE:XRX) could be looking to make a big acquisition that would consolidate key players in the printer industry. Meanwhile, earnings season continued, and Wendy's (NASDAQ:WEN) weighed in with results that suggest a tasty future for the fast-food chain.
Xerox eyes HP
Shares of Xerox gained almost 2% Wednesday morning after reports suggested that the company famous for bringing the copier to the business world could be looking to make a major buyout. Specifically, tech peer HP (NYSE:HPQ) looks like the likely target. The Wall Street Journal said that Xerox is considering offering a combination of cash and stock in order to acquire the PC, laptop, and printer specialist.
Just on its face, the idea seems a bit strange. Xerox is an $8 billion company, while reports suggest the bid for HP would be close to $27 billion. Now that HP shares have moved higher on the news, the company's market cap is closer to $30 billion. Yet Xerox has apparently managed to find a financial institution willing to make loans to cover the cash portion of any buyout.
Both Xerox and HP face significant challenges as the technology industry continues to evolve. Most big tech companies have shifted their focus away from lower-margin hardware products to concentrate on software and services, and the rise in mobile devices has largely left sellers of larger equipment behind.
Yet Xerox recently left shareholders feeling better about its prospects after it boosted its earnings guidance for 2019. The company has a long way to go to make a full turnaround, though, and that might be prompting a more aggressive strategic move geared at combining forces and finding a better solution for both Xerox and HP.
Wendy's looks appetizing
Meanwhile, shares of Wendy's were higher by 1% after it reported third-quarter financial results. Not only were the current numbers strong, but Wendy's also expects good performance in the near future.
The fast-food chain said that same-restaurant sales growth came in at 4.4% in its North American locations. That helped to lift total revenue by 9% compared to the year-earlier period and boosted adjusted earnings per share by nearly 12% year over year.
Wendy's also raised its outlook for the full year. The company expects global systemwide sales growth of 3.5% to 4%, with adjusted earnings per share likely to come in between down 1.5% and up 1.5%. Both numbers are better than previously expected, and Wendy's said it's on track to meet financial goals for 2020 as well.
The fast-food restaurant business has been extremely competitive, but Wendy's has moved aggressively to defend its market share and fight its rivals. Based on its latest numbers, it looks like those moves are taking Wendy's in the right direction.