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The reality of the fact that, in one week, $85 billion in automatic budget cuts is about to go into effect, doesn't appear to be sitting well with the broad-based S&P 500 (SNPINDEX: ^GSPC  ) . While fiscal cuts are needed in order to reduce the federal deficit, both Democrats and Republicans remain miles apart with ideas as to how to achieve these spending cuts. If no accord is reached, the defense sector can expect some major funding cuts beginning March 1.

Following yesterday's tumultuous drop, the S&P 500 continued its trek to the downside, giving up another 9.53 points (-0.63%), to close at 1,502.42. Although the move was decisively lower, yet again, there were three incredible standouts within the S&P 500.

Grocer Safeway (UNKNOWN: SWY.DL  ) was the biggest gainer within the index today, gaining 14.1%, following the release of better-than-expected fourth-quarter results. For the quarter, revenue improved 1%, to $13.77 billion, as EPS leapt to $1.02, from $0.67 in the year-ago period. Part of its strength can be traced to its customer loyalty programs, which have resulted in higher-than-expected mobile app and digital coupon usage; but it's also a direct reflection of its aggressive share repurchases. In addition, because of the NetSpend Holdings acquisition earlier this week, Safeway's subsidiary, Blackhawk Network Holdings, which is slated to be spun off sometime in the first-half of 2013, could find its value heading even higher. The Safeway turnaround looks well under way!

Speaking of turnarounds, J.C. Penney (NYSE: JCP  ) wiggled its way into the best performers column for a second straight day, rising 6.7%. Penney is  up, yet again, on high hopes from investors that it'll be successful in a New York courtroom in wrangling the rights to sell Martha Stewart Living Omnimedia (UNKNOWN: MSO.DL  ) products in its stores. Martha Stewart's company entered into a contract with Macy's in 2007, according to Macy's lawyers, which should prevent Penney from opening in-store Martha Stewart shops and selling the exclusive products. Penney, in turn, also holds a 16.6% stake in Martha Stewart Living Omnimedia. Let the circus begin!

Finally, discount retailer Dollar General (NYSE: DG  ) rallied almost 4%, after a dismal earnings forecast from rival Wal-Mart. Wal-Mart blamed delays in customers receiving income tax refunds and the higher payroll tax for a tempered outlook. Overall, Wal-Mart has cashed $1.7 billion in tax refunds year to date, compared to $4 billion at this time last year. Dollar General, which makes its home in the deep discount retail arena, should stand to benefit if fewer customers are shopping at Wal-Mart. Having fallen about 20% from its 52-week high, now could be the time to give this discount retailer a closer look.

Will this turnaround ever take place?
J.C. Penney has been a train wreck whose comeback always seems just around the next earnings corner, but people are beginning to doubt if CEO Ron Johnson can weave the same magic that he did at Apple. Investors wondering whether J.C. Penney is a buy today are invited to claim a copy of The Motley Fool's must-read report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof -- and, as a bonus, you'll receive a full year of expert guidance and updates as key news develops. Simply click here now for instant access.

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Related Tickers

9/29/2016 11:31 AM
^GSPC $2166.45 Down -4.92 -0.23%
S&P 500 INDEX CAPS Rating: No stars
DG $69.95 Down -0.55 -0.78%
Dollar General CAPS Rating: ***
JCP $9.50 Down -0.05 -0.52%
J.C. Penney CAPS Rating: *
SWY.DL $0.00 Down +0.00 +0.00%
Safeway CAPS Rating: **
MSO.DL $0.00 Down +0.00 +0.00%
Martha Stewart Liv… CAPS Rating: *