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Disney May Be Losing Some of Its Luster

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Despite a weaker-than-expected rise in retail sales numbers and a report indicating that GDP growth in China is continuing to slow, the markets are modestly higher this afternoon. As of 12:50 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 11 points, or 0.07%, while the S&P 500 has risen 0.11% and the NASDAQ is 0.13% higher.

The Chinese GDP number came in at 7.5% for the second quarter, which is lower than the 7.7% it hit in the first three months of the year. Retail sales grew at a 0.4% rate, which, though positive, is less than half what economists had been expecting. 

While the major indexes are climbing, a few of the Dow's components are slipping.

Shares of Disney (NYSE: DIS  ) have fallen 1.4% on news that the company has agreed to settle claims that it violated U.S. antitrust laws by agreeing with competitors not to recruit employees from one another. According to court documents filed on July 12, Disney's Pixar and Lucasfilm units have agreed to settle all claims brought against the companies. At this time the details of the settlement are unknown, and Disney's lawyers have said they will present the proposed settlement to the court in the near future. It's unlikely that the settlement amount will be high enough to seriously harm the company, but this incident has left a black mark on Disney's reputation.  

Despite strong numbers from JPMorgan Chase's and Wells Fargo's credit card units last week, shares of American Express (NYSE: AXP  ) are down 0.5% today. Both of the big banks reported gains in their units and improving credit quality, which bodes well for American Express shareholders as they wait for company earnings to be released on July 17. But the strong stock performance may be building shares up for a big crash if earnings miss expectations this week. On the heels of the news about JPMorgan and Wells, American Express rose 2.6% last week alone, and year to date the shares are up 35.4%. Additionally, given that shares opened at a 52-week high today, investors are likely just reducing their exposure ahead of the second-quarter earnings report   

Shares of Travelers (NYSE: TRV  ) are down 1.2% this afternoon. While there's little negative news pertaining to the company today, my colleague Dan Caplinger did warn investors over the weekend that the company may not have much upside left. Shares are up more than 15% in 2013, but we're now moving into hurricane season, and, as Dan noted, the stock is trading at a price-to-book value of 1.25, which isn't cheap. Because the company can't get overly aggressive with its investments, and bond yields have once again slowed their climb, it may be difficult for the company to grow profit in the coming quarters.

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  • Report this Comment On July 15, 2013, at 4:12 PM, TMFSpeck wrote:

    I don't think Disney is "losing some of it's luster". I think this is more a short-term blip due to some unfortunate news.

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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
AXP $64.04 Up +0.67 +1.06%
American Express CAPS Rating: ****
DIS $92.86 Up +1.06 +1.15%
Walt Disney CAPS Rating: *****
TRV $114.55 Up +0.68 +0.60%
The Travelers Comp… CAPS Rating: *****