Why This Stock Is Defying the Dow's Drop

The Dow is down slightly today, as this morning's economic reports were mixed and House Speaker John Boehner said fiscal-cliff talks aren't proceeding well. At the halfway point of the trading day, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 55 points, or 0.4%, to 13,190. The S&P 500 (SNPINDEX: ^GSPC  ) is down eight points, or 0.6%.

Earlier this morning there were 4 U.S. economic releases:

Report

Period

Result

Previous

New unemployment claims

Dec. 2 to Dec. 8

343,000

372,000

Retail sales

November

0.3%

(0.3%)

Producer price index

November

(0.8%)

(0.2%)

Core PPI

November

0.1%

(0.2%)

Source: MarketWatch U.S. Economic Calendar.

This morning the U.S. Department of Labor said new unemployment claims dropped 29,000 to a seasonally adjusted 343,000. This was better than the expected claims of 370,000. Claims have not been below 340,000 since mid-2008. The four-week average is 381,500, but that is still being affected by the jump to 451,000 after Not-Quite-a-Hurricane Sandy hit the East Coast.

US Initial Claims for Unemployment Insurance Chart

US Initial Claims for Unemployment Insurance data by YCharts.

The second economic release was from the Department of Commerce, which reported that retail sales were up 0.3% in November. If you exclude spending at gas stations, which were greatly affected by Sandy, growth would have been double. Analysts had expected growth of 0.4%, so this was just slightly below expectations.

The third economic release was from the Bureau of Labor Statistics, which reported that its producer price index for finished goods fell 0.8% in November, versus analyst expectations of a 0.5% fall. Core PPI, which excludes volatile food and energy prices, rose 0.1%, just below analyst expectations of a 0.2% rise.

Yesterday's big news was the Federal Open Market Committee's statement. The Federal Reserve announced that purchases of treasury bonds would occur at a rate of $45 billion per month. The Fed believes this program, combined with its mortgage-buying program of $40 billion per month, will provide a stimulus to the economy. The other interesting statement was that the Fed plans to keep stimulating the economy until unemployment drops to 6.5%. The unemployment rate is currently 7.7%.

In fiscal-cliff news, we had our first new news all week. House Speaker John Boehner said today: "It's clear the president is just not serious about cutting spending. But spending is the problem." Ominously, he added, "Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to -- and over -- the fiscal cliff." While this is political posturing, analysts had been hoping that talks were proceeding well, as no news had come out.

The Motley Fool has created a special page that will be updated with all of our latest fiscal-cliff coverage to help cut through the daily noise and give you the information and analysis you need as an investor. Head on over for everything you need to know about fiscal cliff 2012.

With a mixed bag of economic reports and negative news about the fiscal cliff negotiations, it's no surprise that the market is down.

Today's Dow leader
Today's Dow leader is Wal-Mart (NYSE: WMT  ) up 0.45% to $69.24. The stock is up on the positive retail numbers the Department of Commerce reported earlier today, as well as rumors of the possible acquisition of Migros, the largest retailer in Turkey.Wal-Mart all but dominates the American retail market, and expansion opportunities here are limited. While its expansions outside the U.S. have had mixed success, the new markets Wal-Mart is expanding into should work out in the long run.

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.


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