Trade negotiations between the U.S. and China have gotten a lot of attention from investors, and successive rounds of tariffs in recent months have made market participants uncertain about the future. That explains a big part of why the market reacted favorably to news that China would consider removing some tariffs gradually as negotiations continue. As of 11:10 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 230 points to 27,723. The S&P 500 (SNPINDEX:^GSPC) rose 17 points to 3,094, and the Nasdaq Composite (NASDAQINDEX:^IXIC) was higher by 66 points to 8,476.
Chinese search engine giant Baidu (NASDAQ:BIDU) has seen its stock struggle for a while now, and trade issues haven't been the only challenge the company's faced. However, a favorable report from Baidu helped lift its shares. Meanwhile, disappointing results elsewhere in the online travel sector hurt Booking Holdings (NASDAQ:BKNG), yet some have high hopes that Booking's financial report due out later today will defy naysayers once again.
Investors say Buy-du
Shares of Baidu climbed almost 12% after the Chinese tech company announced its third-quarter financial results. Even though many of Baidu's numbers didn't look pretty, investors seemed to see the report favorably.
Baidu faced some challenges during the quarter. Revenue was down a fraction of a percent from year-earlier levels, and adjusted earnings per share dropped by a third. A large impairment charge sent Baidu to a sizable net loss on a reported basis.
However, there were some promising signs for Baidu. For the core search business, daily active user counts hit 189 million in September, up 25% in the past 12 months. Baidu's in-app search capability is gaining more traction, and the company's operating margin levels have soared due to greater efficiency. Meanwhile, other business segments in areas like the DuerOS voice assistant and the Apollo smart transportation services unit reached milestones and have a lot of promise.
Baidu's stock has taken a huge hit over the past year, but many have hoped that the company would be able to recover some of its former glory. There's still a long way to go, but Baidu looks like it's finally getting on track to make a comeback.
Waiting for Booking
Elsewhere, shares of Booking Holdings fell 8%. The online travel giant is set to report its financial results later this afternoon, but investors didn't wait after getting negative signals from some of the company's rivals.
The likely reason for concern was Expedia Group, which released its latest earnings report Wednesday night. At Expedia, revenue and gross bookings were up just 9% year over year during its third quarter, and growth in room-nights slowed to 11%. Most measures of earnings fell compared to year-earlier levels, as expenses were up double-digit percentages overall. Expedia also predicted tough conditions would last throughout the remainder of the year, cutting guidance.
Booking has a lot in common with Expedia, and that explains the move downward in sympathy. Booking has also seen some of the same trends of slowing growth rates in its own core business. Yet one thing that makes Booking stand out from its peers is its emphasis on its international hotel business.
Combined with competitive advantages in its operations, Booking might well be able to withstand the pressures that Expedia faced and deliver solid results when it reports its latest financials. If it does, then this morning's share-price drop could reverse itself quickly.