Stocks moved lower Thursday as investors awaited signs of progress in trade talks between the U.S. and China. The Dow Jones Industrial Average (^DJI 0.13%) and the S&P 500 (^GSPC 0.11%) tipped briefly into the green in the afternoon, but closed with small losses. Energy and biotech stocks continued their upward moves from yesterday, but gold stocks and the real estate sector were weak.
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As for individual stocks, Macy's (M -2.25%) reported falling sales and PayPal (PYPL -1.17%) announced an acquisition that it expects will strengthen its engagement with consumers.
Macy's reports a miserable quarter
Third-quarter earnings reports from retailers are revealing clear winners and losers in the current consumer environment, and Macy's results left little doubt which category that company is in now. Sales at the mall-based fashion chain tumbled, though the company still managed to report a profit, and the already-cheap shares only fell 2.3%.
Net sales fell 4.3% to $5.17 billion, missing the analyst consensus of $5.32 billion, but the company earned an adjusted $21 million, or $0.07 per share, compared with $0.27 in the period a year earlier and Wall Street's expectation of a break-even quarter.
Comparable sales fell 3.5% after seven consecutive quarters of growth. Macy's had said last quarter that it was anticipating a sales decline compared with a strong Q3 a year ago, but the deceleration was sharper than it expected. The company blamed the weather, soft international tourism, weak performance in lower-tier malls, and problems with its website.
Despite claiming that the issues in Q3 were temporary, Macy's issued surprisingly weak guidance for the holiday quarter. Analysts on the conference call were left wondering whether the trends are longer-term and the company's dividend may be in jeopardy.
PayPal's biggest acquisition ever could be a sweet deal
PayPal announced an agreement to buy privately held Honey Science, maker of a technology platform that allows consumers to find bargains and rewards, in a deal worth $4 billion. Shares slipped 1.5%.
Honey offers a browser extension and a mobile app that both help users find savings across a network of around 30,000 merchants. Honey has its own loyalty program, and provides a unified checkout experience to about 17 million monthly active users. PayPal plans to integrate Honey's technology into its payment platforms, giving it a way to engage the 275 million users of PayPal and Venmo earlier in the shopping process, and allowing the company to offer customer engagement tools to its network of 24 million merchants.
Despite the hefty price tag, PayPal has over $10 billion in cash and short-term investments on its balance sheet, and won't have any trouble paying for Honey. PayPal expects the high-growth business to add to non-GAAP earnings by fiscal 2021, and the deal to close in the first quarter of next year.