Even though Gross Domestic Product in the U.S. reportedly increased by 2% during the third quarter, another report caused investors to turn bearish on the market today. The Dow Jones Industrial Average (INDEX: ^DJI ) barely managed to end the trading session higher. As the closing bell rang, the Dow sat at 13,107, up just 3.53 points, or 0.03%. GDP rose more than most economists expected, which ranged from 1.7% to 1.9%, depending on the source. While that surprise gave the market a lift in the early morning, the University of Michigan Consumer Sentiment report missed expectations and can be blamed for the market's diminished performance.
With that report, 17of the Dow's 30 components were in the red today. This afternoon, I explained why JPMorgan Chase (NYSE: JPM ) , Bank of America (NYSE: BAC ) , and Home Depot (NYSE: HD ) were moving lower; now find out why Merck (NYSE: MRK ) , Disney (NYSE: DIS ) , and Wal-Mart (NYSE: WMT ) also were in the red today.
So why are they down?
Pharmaceutical giant Merck was lower today after the company announced earnings. While the company beat estimates on earnings per share, it missed on revenue, which happened to fall 4%. The company blamed unfavorable exchange rates for the revenue decline, an explanation we have seen from a number of companies this quarter. The company also recently lost patent protection in the U.S. for its popular Singulair drug, but believes that their strong pipeline of new drugs will bear fruit by the end of 2013. Shares were down 0.32% as the bell rang.
While Disney saw its stock lose 0.36% today, Wal-Mart had its shares cut by 0.28%. Both companies are highly consumer driven and must not have liked the poor consumer sentiment report today. The University of Michigan reported that their index rose from 78.3 in September to 82.6 in October, but that was lower than the preliminary October reading of 83.1, and the 83 that had been projected by economists. Most investors would consider Disney's products as more discretionary than Wal-Mart's, but both organizations are hurt when consumers are more fearful of the future.
While we are on the subject of fear, Hurricane Sandy is causing a number of companies to increase inventory, due to customers' fears. With the storm predicted to hit a number of states, companies such as Wal-Mart, Home Depot, Lowe's (NYSE: LOW ) , and Target (NYSE: TGT ) are stocking up on emergency equipment, like flash lights, generators, canned goods, and bottled water. Properly preparing not only benefits customers, who can get what they need, but also does wonders for the bottom lines of organizations that have enough of what the consumer wants.
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in our special report. Uncovering these top picks is free today; just click here to read more.