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.
The Dow Jones Industrial Average (^DJI 1.18%) posted strong gains today for the second day in a row, as negotiations continued between President Obama and Congressional Republicans to resolve the debt ceiling standoff and the government shutdown. No agreement has been reached, and details on the discussions were limited, but investors interpreted the talks as a sign that the threat from the two crises has been contained, and a solution is on the way. Lawmakers seemed confident that a deal would be made by the beginning of next week, and the blue chips finished up 111 points, or 0.7%.
While the official retail sales report did not come out today as scheduled, due to the government shutdown, a separate report of nine retailers showed same-store sales growing just 0.4% in September, well below expectations of 3.1%. Clothing stores, in particular, disappointed, with the Gap posting a 3% decline, and J.C. Penney reporting a 4% drop. Elsewhere, the preliminary October consumer confidence report from the University of Michigan fell to a nine-month low, at 75.2. That was better than expectations of 74.5, but down from 77.5 in September, as the fiscal impasse weighed on consumers though the decline was relatively modest.
JPMorgan Chase (JPM -0.60%) kicked off earnings season for the Dow this morning, finishing the day nearly unchanged, as the banking giant posted a loss in the quarter of $380 million, or $0.17 a share, its first since 2004, due to $9.2 billion in litigation expenses. The shortfall includes funds set aside for pending legal battles in a reserve totaling $23 billion, and CEO Jamie Dimon warned that the bank will likely see further legal expenses over the next year or two. The legal dent was largely expected as evidenced by the stock's unaffected performance. Revenue was down 8% to $23.9 billion, in line with expectations, as income from lending, fees, and bond-trading all fell, but adjusted earnings of $1.40 per share easily beat estimates at $1.21.
Finally, Johnson & Johnson (JNJ -0.43%) was the Dow's big winner today, climbing 1.9% after getting an upgrade from sell, to neutral, from Goldman Sachs. Goldman noted that J&J's pharma division has performed especially well this year, and its pipeline looks promising. The health-care giant will report earnings on Tuesday, with analysts expecting earnings per share of $1.32, and revenue at $17.4 billion.
