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.
A number of different U.S. economic data points were released this morning, but while they are largely positive, the major indexes are all moving lower this afternoon. As of 1:15 p.m. EST the Dow Jones Industrial Average (^DJI 0.56%) is down more than 50 points, or 0.35%, while the S&P 500 is off by 0.6% and the Nasdaq is down 1.2%.
Probably the most important economic report came from the Bureau of Economic Analysis, which said third-quarter gross domestic product growth was 2.8%, topping the 2% most economists had expected and the 2.5% seen during the second quarter. The Department of Labor also issued last week's initial jobless claims report, which came in at 336,000 claims -- a drop of 9,000 but still 1,000 claims higher than what economists predicted.
The European Central Bank also announced that it had again cut interest rates in the region in an attempt to quicken the recovery. While on the surface this seems to be good news, it actually just highlights the fact that Europe still has a long way to go until it is back up and running at full steam.
As the major indexes move lower today, it's not too difficult to find a few big losers. One of the Dow's biggest losers at this time is Disney (DIS -0.26%), whose shares are off 1.8% today as investors wait for third-quarter results to be released after the closing bell. Furthermore, the company announced a deal with Netflix to produce several shows featuring Marvel comics characters. While most of the characters picked for the new venture aren't widely known, this is a great chance for Disney to build new franchises. Today's decline seems a little irrational, and investors should hold until reviewing the earnings report tonight.
Outside the Dow, shares of Whole Foods Market (WFM) are having a tough run today, with shares down 9%. The company reported earnings last night that were not terrible: Earnings of $0.32 beat analyst estimates by a penny. Revenue came in slightly lower than expected at $3 billion, but same-store sales rose 5.9%, while identical-store sales rose 5.5%. So what's causing the massive decline? The company lowered its full-year 2014 outlook for revenue, earnings, and comparable sales figures. While analysts were expecting 2014 EPS to hit $1.73, the company cut its own range of $1.69-$1.72 down to $1.65-$1.69 per share. Sales growth was lowered from a range of 12%-14% down to 11%-13%, while comparable sales were dropped from a range of 6.5%-8% down to 5.5%-7%. Although this most recent quarter was solid, investors are always looking to the future. As Whole Foods carries a rather high price-to-earnings ratio and other metrics indicating that growth has been baked into the stock price, one slip can cause the stock to bomb.
And lastly, while we have seen a mixed bag from the casino operators this earnings season, one of their suppliers, International Game Technology (IGT 0.60%), is having a terrible day after reporting earnings this morning. Shares are down almost 12% after the company reported revenue had risen 0.2% compared to the same quarter of last year, beating analysts' sales forecasts. But EPS of $0.30 missed expectations by $0.04. Guidance for full-year 2014 was in the range of $1.28 -$1.38, while analysts had predicted $1.36. It's difficult to say why shares are off by so much, but trading volume is twice the average. Until it's known why the stock is falling, average investors should just sit tight; this just may be another irrational market move.
