It was largely a day of anticipation for investors, who anxiously awaited the Federal Reserve's June meeting minutes to gain insight into the likelihood of further stimulus. Once the minutes were released, disappointed investors spurred a small sell-off on the S&P 500 (INDEX: ^GSPC ) earlier this afternoon. But just two hours later, the index closed even. What happened?
Overall, the tone of the minutes hinted at a poor economic environment, but not quite bad enough for the Fed to provide stimulus moving forward. Terms like "weaker than expected" and "slower growth" littered the report, and Secretary William English raised the issue of the continued high unemployment rate. None of the points introduced new storylines per se, other than the notion that stimulus is not imminent. Investors, however, seemed to get over their initial disappointment by the end of the day to push the index back to flat.
One peripheral storyline that could weigh down agriculture-related stocks emerged: The U.S. Department of Agriculture declared a drought affecting 26 states today. The lower crop supply pushed crop prices higher and will increase costs for a wide range of food companies. The news punished Dean Foods (NYSE: DF ) the hardest. A large number of its products feature some element of affected crops, and shares dropped 6.6% on the day.
Another major storyline, of course, is the beginning of earnings season. As with earlier this week, surprise revisions made ripples throughout several industries. After hhgregg (NYSE: HHG ) slashed its EPS estimates from the $1.12-to-$1.27 range down to a range of $0.90 to $1.05, investors dropped rival Best Buy (NYSE: BBY ) by 8.4%. The revision paints a bleak picture for the overall industry, and many investors worry that online retailers such as Amazon.com will capture significant market share in the near future.
A few companies did manage productive days, though. Abercrombie & Fitch soared more than 4% after news leaked that the retailer plans to buy back a number of shares while scaling back European expansion plans. Mead Johnson Nutrition (NYSE: MJN ) also gained around 4% on some good news out of China. A Chinese agency recanted an earlier erroneous report that determined that Mead's baby formula may have been unsafe. The agency said that invalid testing led to the incorrect report.
How investors should react
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