What Happened in the Stock Market Today

By Demitrios Kalogeropoulos Markets Fool.com

Stocks took a big step back from record highs on Wednesday, with the Dow Jones Industrial Average(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) indexes each finishing lower by nearly 2%.

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Today's stock market

Index

Percentage Change

Point Change

Dow

(1.78%)

(372.82)

S&P 500

(1.82%)

(43.64)

Data source: Yahoo! Finance.

Financial stocks were among the hardest hit, with the heavily tradedFinancial Select Sector SPDR ETF (NYSEMKT: XLF) losing just over 3%. On the other hand, gold prices moved aggressively higher, and that helped the leveraged bullish bet on the precious metal, Direxion Daily Gold Miners Bull 3X ETF (NYSEMKT: NUGT), gain nearly 5%.

As for individual stocks, Target (NYSE: TGT) and Photronics (NASDAQ: PLAB) made moves following the companies' quarterly earnings announcements.

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Image source: Getty Images.

Target's slight sales improvement

Target was one of just a few stocks on the S&P 500 that gained ground on Wednesday. The retailer's shares rose after it reported first-quarter results that included surprisingly strong profit growth as earnings jumped 20% to $1.22 per share. That trounced the range of $0.80 to $1.00 per share that executives had guided for in late February.

Target's sales trends also edged past expectations, with comparable-store sales declining by 1.3% to mark a tiny improvement over last quarter's 1.5% decrease. Management said they were encouraged by rising demand trends as the quarter progressed. "After starting the quarter with very soft trends," CEO Brian Cornell said in a press release, "we saw improvement later in the quarter, particularly in March."

Image source: Target.

Profitability and customer traffic both shrank during the quarter, which indicates that Target's more aggressive pricing strategy failed to pack the aisles with shoppers. Investors can't expect big profit gains at least over the next few years, either, since the retailer is planning to pour resources into building up its e-commerce infrastructure while shifting its competitive position toward the value end of the market. Yet sales growth trends won't be as bad as initially feared, as Cornell and his team now predict a less brutal comps decline in 2017 than they did three months ago.

Photronics' sinking profit margin

Investors punished Photronics stock after the photomask specialist announced declining sales and profits for its fiscal second quarter and issued conservative sales and profit guidance. Revenue fell 12% due to a 9% drop in integrated circuit photomasks and a 20% slump in those destined for flat panel displays. Net income dove 80% due to a drop in profitability that management blamed on weakening demand for its higher-margin products.

Image source: Getty Images.

"[I]mproving display photomask sales were offset by a decline in our high-end logic business inTaiwan," CEO Peter Kirlin said in a press release.

For the quarter ahead, Kirlin and his team believe they'll benefit from strong overall demand. However, they think a rebound in Photronics' high-end logic business may not happen until the fourth quarter. As a result, their outlook called for revenue between $110 million and $120 million, which lagged consensus estimates targeting $127 million of revenue.

Profits will also be lower than expected. Photronics predicts between $0.05 and $0.12 per share of earnings next quarter while Wall Street was looking for $0.17 per share.

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Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.