Stock Market News: McDonald's Makes a Buy; Activists Send Bed Bath & Beyond Soaring

The stock market enjoyed sizable gains on Tuesday morning, bouncing back from weakness over the past few trading sessions on hopes that the U.S. economy will be able to weather the challenges that much of the rest of the world is currently facing. As of 11:40 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 237 points to 25,754. The S&P 500 (SNPINDEX: ^GSPC) gained 26 points to 2,824, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 75 points to 7,713.

Investors like to see the companies whose shares they own taking steps to try to grow and make themselves more valuable. McDonald's (NYSE: MCD) announced an acquisition that it hopes will make it more competitive in a rapidly changing environment for fast-food restaurants, while Bed Bath & Beyond (NASDAQ: BBBY) stock got a big boost on news that activist investors are looking to help the ailing home goods retailer bounce back from its recent difficulties.

A big buy for the Golden Arches

Shares of McDonald's climbed 1% after the fast-food giant announced that it would buy a digital company to try to make improvements to the way it works with customers. Privately held Israeli start-up Digital Yield was McDonald's target, and the transaction will involve a payment of more than $300 million.

McDonald's CEO Steve Easterbrook explained much of the thinking behind the acquisition. "We're expanding both our ability to increase the role technology and data will play in our future," Easterbrook said, "and the speed with which we'll be able to implement our vision of creating more personalized experiences for our customers."

In particular, McDonald's hopes to use the technology it acquires from Digital Yield to change its drive-thru menu displays not only to reflect different menus at various times of day but also to highlight different food and beverage choices based on weather, traffic, and trending items. For instance, on a cold day, hot coffee beverages might get higher billing at the drive-thru display than they'd get on a warm day.

McDonald's has worked hard to bulk up its technology, with a mobile app, self-ordering kiosks, and greater use of displays within restaurant locations. Digital Yield should only accelerate this trend, vaulting the Golden Arches into a leadership role in defining the evolution of fast food going forward.

Bed Bath & Beyond could get a clean slate

Meanwhile, shares of Bed Bath & Beyond jumped more than 25% in the wake of news that several prominent activist investment companies are interested in making major changes at the home goods retailer. According to reports, Legion Partners Asset Management, Macellum Advisors, and Ancora Advisors have collectively taken a 5% stake in Bed Bath & Beyond, and they're looking to replace all 12 members of the company's board of directors.

Like many brick-and-mortar retailers, Bed Bath & Beyond has struggled to adapt to the challenges created by the rise of e-commerce. In particular, many of the items that Bed Bath & Beyond sells are exposed to competition from online-only retailers. Despite investing to make changes to its physical locations and to try to bulk up its own e-commerce channel, Bed Bath & Beyond hasn't been able to demonstrate much progress, as comparable-store sales have continued to decline.

Bed Bath & Beyond believes that its efforts will eventually bear fruit. Yet many are skeptical that even a complete board and executive shakeup will be enough to turn the company around. No matter what new management does, a brick-and-mortar-heavy store network will always face cost disadvantages compared to e-commerce specialists. With a proxy fight impending, investors can expect Bed Bath & Beyond shares to see volatility in the days and weeks to come.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Bed Bath & Beyond. The Motley Fool has a disclosure policy.