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.
With another week of earnings ahead of us and the Federal Reserve's two-day policy meeting gearing up tomorrow, Wall Street cautiously bid shares higher, as the S&P 500 Index (SNPINDEX: ^GSPC ) reached fresh all-time highs once again. Today's gains, however, were by no means universal, and some of today's worst performers fell due to legitimate valuation concerns and earnings that failed to impress. The S&P 500, however, added 2 points, or 0.1%, to end at 1,762. The index has surged more than 25% so far this year.
If you're a Netflix (NASDAQ: NFLX ) investor, you may be scoffing at those measly 25% gains; shares of the video-streaming service have more than tripled already in 2013. So while today's 4.3% slump is just a small bump in the road for long-term investors, it's still not unreasonable to question whether the stock's run is nearly over. Today's decline may simply be the result of continued fallout from activist investor Carl Icahn's announcement last week that he'd unloaded about half of his investment in the company. Although I love the company's prospects -- Netflix just landed the wildly popular Showtime series Dexter -- I don't love its valuation with shares trading at 260 times earnings.
Stock in pharmaceutical giant Merck (NYSE: MRK ) slumped 2.6% Monday, as third-quarter earnings beat expectations but sales failed to impress. Even though Merck's earnings fell by 35% from the same quarter a year ago, analysts were expecting an even steeper decline as generic competitors hit bottom-line results. The company's recently announced layoffs -- Merck is trimming its workforce by 8,500 workers -- are expected to cut costs by $2.5 billion over the next two years.
Lastly, stock in solar module producer First Solar (NASDAQ: FSLR ) lost 2.5% Monday. No investor likes to their shares lose value like this in a single day, but the volatility is actually fairly normal for First Solar. Volatility, in fact, is the price you pay as an early investor in an emerging industry like solar technology. This is a vitally important week for publicly traded solar stocks, and if the company doesn't live up to expectations when it reports quarterly earnings on Halloween, we'll probably see First Solar take another steep stumble in just a few days.
What should I know about Netflix as an investor?
While its valuation is a little tricky, this much is certain: Netflix is a superb, paradigm-shifting company. Did you know that Americans reportedly spend nearly 34 hours a week watching television? With television viewing taking up almost as much time as the average work week, the potential for profits in the space is enormous. The Motley Fool's top experts have created a new free report titled "Will Netflix Own the Future of Television?" The report not only outlines where the future of television is heading, but offers top ideas for how to profit. To get your free report, just click here!