Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The major indexes and stock market, in general, had a very poor day today, but two of the Dow Jones Industrial Average's components bucked that trend, while another ended just slightly higher during the regular trading session but soared in the after-hours period. Let's take a moment and see what was going on today.
Shares of AT&T (T 1.10%) and Verizon (VZ 0.90%) rose an astonishing 1.38% and 1.12%, respectively, today despite being two of only seven Dow components ending the day in the black. The index itself lost more than 175 points today, or 1.07%. The likely cause for the move higher was an announcement made yesterday by AT&T that it would be reporting a non-cash gain of $7.6 billion from its pension plan due to better-than-expected performance of the company's pension during 2013. Verizon recently reported a similar event when it said that it would report a $6 billion gain from its pension obligation. What this essentially means is that the amount each company will need to add to its employee's pension funds has just dropped by a massive amount, and thus, more money can be used for business operations, or given back to shareholders.
Another Dow component that finished in the black, but then really took off during the after-hours session, was Microsoft (MSFT -1.27%), which was trading up 3.51% in the extended trading session this evening at 8 p.m. EST after finishing the regular trading period up 0.35%. The reason for the big jump in the extended period was the company's earnings report. Big Softy reported earnings per share of $0.78 on revenue of $24.52 billion. Analysts were expecting earnings per share of $0.68 on revenue of $23.44 billion. The much-better-than-expected results were great to see, but many investors were hoping management would have more to report along the lines of who may be taking over for the retiring Steve Ballmer. The company did not discuss this at all during the conference call.
Another big winner in the after-hours session was Starbucks (SBUX 0.53%), which closed the regular trading day down 0.29%, but ended the extended period up 1.1%. The move was, again, the result of a better-than-expected earnings report. Starbucks posted earnings per share of $0.71 for the quarter, much better than the $0.57 it reported a year ago, and higher than the $0.69 analysts were expecting. On the revenue side, Starbucks reported $4.24 billion in sales, again much higher than the $3.79 billion last year, but slightly lower than the $4.3 billion Wall Street was looking for. But on a same-store sales basis, the company saw a 5% increase both in the Americas and internationally, while operating margins climbed from 16.6% to an impressive 19.2%. Despite the slight miss on revenue, the report seemed to be very strong.
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