
McDonald's Sales Surprise Beefs Up Stock Rally
McDonald's (MCD) - Get Reportsales are showing unexpected strength and investors are lovin' it.
Shares of the fast-food chain were the clear winner on markets Thursday, by far the largest contributor to the Dow Jones Industrial Average.
Mickey D's sales in the U.S. rose in the third quarter for the first time in two years, proving that efforts to simplify its menu and improve locations had begun to have an impact on the topline. Domestic same-store sales rose 0.9%, triple expectations. If not for the stronger U.S. dollar, overall sales would have grown 7%.
Its success was felt marketwide and gave the earnings season energy after a lackluster start. The S&P 500 added 1.7% on Thursday, the Dow was up 1.9% or 320 points, and the Nasdaq gained 1.7%.
In post-close trading, Microsoft (MSFT) - Get Report climbed nearly 5% after a better-than-expected quarter. The PC maker earned 67 cents a share, above estimates of 58 cents. Revenue fell 7% to $21.7 billion but beat forecasts by $670 million. Its new Windows 10 operating system is running on 110 million devices as of the end of the quarter.
AT&T (T) - Get Report added 2% after earnings bested estimates and revenue saw a double-digit percentage increase thanks to the completion of its DirecTV acquisition. Excluding merger costs, earnings of 74 cents a share topped forecasts by 6 cents. The telecom expects full-year earnings between $2.68 and $2.74 a share, above analysts' estimates of $2.61.
Google parent Alphabet (GOOGL) - Get Report rocketed 9% higher after reporting net income of $5.73 a share in its recent quarter, up from $3.98 a share. Adjusted earnings, excluding one-time charges, came in at $7.35 a share compared to estimates of $7.20 a share. Sales jumped 13% to $18.68 billion, driven by advertising revenue on its Google sites.
Amazon (AMZN) - Get Report jumped 10% as cloud-computing revenue pushed sales higher. The e-commerce giant reported a surprise profit of 17 cents a share compared to an expected loss of 13 cents. Revenue rose 23% to $25.4 billion, $450 million better than forecasts. Amazon anticipates a 14% to 25% increase in fourth-quarter revenue.
Pandora (P) plummeted 15% after a wider net loss and below-consensus quarterly sales. The streaming company reported a net loss of 40 cents a share in its third quarter compared to a loss of a penny in the same quarter a year earlier. Excluding one-time charges, the company saw a profit of a dime a share. Separately, Pandora has agreed to pay $90 million for its use of recordings
There were other earnings wins scattered throughout the markets on Thursday. In tech, Texas Instruments (TXN) - Get Report increased its sales outlook on greater focus on its analog chip business, and Citrix Systems (CTXS) - Get Report raised its full-year outlook thanks to better operating margins, while eBay (EBAY) - Get Report beat earnings estimates in a quarter which saw the successful spinoff of its PayPal (PYPL) - Get Report business.
That gave tech giants a pep in their step. Consumer tech stocks including Apple (AAPL) - Get Report , Alphabet (GOOGL) - Get Report , Microsoft (MSFT) - Get Report , Facebook (FB) - Get Report , and Alibaba (BABA) - Get Report rallied, while the Technology SPDR ETF (XLK) - Get Report climbed 2.3%.
The basic materials sector was also rallying after Dow Chemical (DOW) - Get Report beat quarterly earnings estimates and raised its dividend. The industrial chemicals company reported earnings of 82 cents a share, 12 cents above estimates. Its quarterly dividend was increased 10% to 46 cents a share and the company committed to repurchasing $1 billion worth of stock through to the end of 2016.
Other materials stocks such as Rio Tinto (RIO) - Get Report , BHP Billiton (BHP) - Get Report , LyondellBasell Industries (LYB) - Get Report and AK Steel (AKS) - Get Report moved higher, while the Materials Select Sector SPDR (XLB) - Get Report added 2.7%.
But it wasn't just earnings driving markets higher. Hopes the European Central Bank might introduce more stimulus helped boost overall sentiment back home. ECB President Mario Draghi said in a press conference that emerging markets continue to pressure eurozone growth and that the central bank was willing to extend stimulus programs past September 2016 if weakness persists. Draghi said the ECB will review its current stimulus measures at its December meeting.
"Highlighting concerns over emerging market growth and financial market volatility -- two of the same concerns that the Federal Reserve used as justification for not hiking rates in September -- the ECB suggested that it was too soon to think the period of loose monetary policy was coming to a close," Christopher Vecchio, currency analyst at DailyFX, wrote in a note.
The European Central Bank opted to leave interest rates unchanged as it focuses on revitalizing growth in the region through its bond-buying program. The central bank left its main refinancing operation at 0.05%.
"The repeated comments about adjusting the bank's [quantitative-easing] program, including the nod to 're-examining' the program ahead of December's meeting, is as clear a signal that the ECB is likely to expand QE this year," said Matt Weller, senior market analyst at FOREX.com.
European markets closed sharply higher. Germany's DAX gained 2.5%, the CAC 40 in France added 2.3%, and the FTSE 100 in London moved 0.44% higher.








