Dow Hits Record High, Sears Jumps on Surprise Announcement

 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.

Stocks continued their seemingly endless upward march today as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 111 points, or 0.7%, to finish at an all-time closing high of 15,680. Strong earnings reports from the likes of Pfizer helped boost the blue chips along with an expanded share buyback announcement from IBM. Big Blue led Dow stocks with a gain of 2.7% on the news. Investors also seemed to be bullish on the assumption that the Federal Reserve would keep in place its $85 billion monthly bond-buying program as it began its two-day meeting today to discuss the matter. The central bank will announce its decision tomorrow at 2 p.m.

September retail sales met expectations falling 0.1% from August's level, though the sector grew 0.4% after backing auto sales. That beat projection of just a 0.2% gain. The report is closely watched as consumer spending drives 70% of the U.S. economy.

Among retailers making headlines today was Sears (NASDAQ: SHLD  ) , which finished up 12% after management said it was considering spinning off its Lands End and Sears Auto Center businesses. Investors cheered the announcement as Sears as widely seen by the market as an asset play, meaning the value of its holdings is believed to be greater than the company's market value and Sears can realize that value by selling off its entities. The struggling retailer said that Lands End would be spun off into its own stock, if separated, allowing shareholders to keep a piece of it. Management also said same-store sales have declined 3.7% in the last 12 weeks, and it sees a net loss of up to $582 million in the third quarter, worse than the loss a year ago and a sign that the core retail business is far from turning itself around.

Linkedin (NYSE: LNKD  ) shares sold off 3% after hours as the high-flying social network gave a surprisingly conservative forecast. Shares of Linkedin have increased more than 400% since its 2011 IPO, but the company is still barely profitable as the stock gains are largely predicated on the company's growing market power in recruiting, job hunting, and networking. Though revenue grew 56% in the third quarter to $393 million, management predicted top-line growth would fall to 37%-38% in the current quarter. While, that's still an impressive clip, it shows that growth may be slowing faster than expected. Analysts had expected a sales increase of 44%, and for a company with a sky-high price-to-sales ratio above 20, that slowing growth could be a big problem.

Stocks that go the extra mile
Despite its disappointment today, Linkedin was named as one of "The Motley Fool's 3 Stocks to Own Forever." To find out what the other two are and what makes them so special, just click here now. It's completely free.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2704897, ~/Articles/ArticleHandler.aspx, 8/22/2014 9:50:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement