Stocks came under pressure Thursday as investors worried that increasingly negative rhetoric from China may indicate that a trade deal may not be near. The Dow Jones Industrial Average (DJINDICES: ^DJI) fell almost 450 points but partially recovered, and the broader S&P 500 (SNPINDEX: ^GSPC) also had a significant loss despite a late rally.
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The price of crude oil tumbled 5.6% to below $58 a barrel, making the energy sector the biggest loser today. Interest rates declined, lifting rate-sensitive utilities.
As for individual stocks, Best Buy (NYSE: BBY) fell despite posting strong profit growth, and Medtronic (NYSE: MDT) reported earnings growth and gave a positive outlook.
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Jump in profit at Best Buy overshadowed by trade concerns
Technology retailer Best Buy met revenue expectations in the first quarter and beat profit forecasts, but shares fell 4.8% as investors grappled with the potential impact of China tariffs. Revenue ticked up 0.4% to $9.14 billion and non-GAAP earnings per share increased 24% to $1.02. Analysts were expecting EPS growth of only 5%.
Comparable sales grew 1.1%, at the high end of the company's guidance, with a 1.3% gain in the U.S. and a 1.2% decline internationally. Domestic comparable online sales increased 14.5%.
Despite the big jump in Q1 earnings, Best Buy only maintained its guidance for full-year profit, saying that it now includes the impact of the recent increase in China tariffs from 10% to 25%, but does not include the effect of a wider list of goods that is being considered by the Trump administration. The company wouldn't speculate on the impact of broader tariffs, and in a market already jittery about trade, that was enough to send the stock down.
Surgical robot sales lift Medtronic
Shares of medical device maker Medtronic rose 3.2% after the company reported results for the fiscal fourth quarter that beat profit forecasts and gave better-than-expected guidance for fiscal 2020. Revenue was flat at $8.1 billion, but reflected 3.6% organic growth, and non-GAAP earnings per share of $1.54 exceeded the $1.47 Wall Street was expecting.
Medtronic had challenges in its cardiac business and dealt with a shutdown of a supplier that sterilizes medical devices, but strong growth in robotic surgery systems resulting from the company's acquisition of Mazor Robotics boosted profits. The cardiac and vascular group had 1.1% sales growth in constant currency, the supplier-affected minimally invasive therapies group managed 5.1% growth, and sales for the restorative therapies group, which includes the Mazor business, increased 6.5%. The diabetes segment, which had a difficult comparison with last year, had a sales gain of 0.6%.
Looking forward, Medtronic expects organic sales growth in fiscal 2020 to be 4%, with non-GAAP EPS between $5.44 and $5.50, up 4.8% from last year and better than the analyst consensus of $5.44.
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