Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Uncertainty about the future course of the economy is nothing new, as investors have seen a ramp-up in volatility in major financial markets for months. But today's onslaught of conflicting information, ranging from disappointing earnings reports among the largest U.S. stocks to mixed economic data on inflation, employment, and manufacturing, led to a much sharper reaction than we've seen lately. The bond market posted a big decline in prices, with yields soaring toward 2.8% -- their highest level in two years. Among stocks, the Dow Jones Industrials (DJINDICES: ^DJI ) quickly plunged, trading down 215 points as of 10:45 a.m. EDT, while other stock benchmarks were down around 1.5% as well.
All 30 Dow stocks are trading lower, and earnings reports from Wal-Mart and Cisco have gotten the most attention. But sellers also seem to be focusing again on names that have been hit hard in recent sessions. Disney (NYSE: DIS ) , for instance, is continuing its correction, dropping another 2% this morning and bringing its total losses over the past week and a half to more than 6.5%. Bearish investors continue to point to the competitive threat that Fox's new Fox Sports 1 channel could pose to Disney's ESPN, but ESPN has handled similar challenges from other networks before with great success.
Home Depot (NYSE: HD ) has fallen more than 2%, perhaps in response to the implications of Wal-Mart's report on the overall retail sector and partially from a further rise in interest rates and their potential impact on housing-market activity. Short-term-minded investors are forgetting, though, that Home Depot survived much worse conditions in housing during much of its bull-market rally in recent years. Admittedly, a correction of just 5% from recent highs doesn't make the stock an unquestioned bargain, but it should get interested investors looking more closely at the home improvement retailer.
Finally, outside the Dow, some positive results emerged that present a different picture of retail. Both Dillard's (NYSE: DDS ) and Kohl's (NYSE: KSS ) have climbed sharply. Dillard's shares have jumped 8% after the company reported record earnings in its second quarter, and even lower-than-expected revenue wasn't enough to dampen enthusiasm about the mid-level department store retailer's prospects in light of a poor showing from rival Macy's earlier this week. Meanwhile, Kohl's has jumped 5% for largely the same reasons, as the retailer managed to meet expectations and post same-store sales growth of almost 1%, also overcoming Macy's.
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