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.
It's official, folks. Wall Street is the master of mixed signals. Just yesterday, the Dow Jones Industrial Average (^DJI 0.40%) sold off in a hurry, tumbling 152 points on the heels of a strong GDP report. As absurd as that sounds, the slump was caused by the legitimate concern that the Federal Reserve would be more likely to taper its QE program after seeing proof of a solid recovery. Today, the stock market saw further proof of a solid recovery, as the U.S. economy added 204,000 jobs in October, blowing out the 125,000 figure some analysts expected. This time, the Dow responded to the good news by roaring 167 points, or 1.1%, higher, to end at 15,761.
Disney (DIS -0.22%) stock also experienced a reversal of fortune, jumping 2.1% after beating earnings and revenue estimates. Yesterday, the entertainment giant was the Dow's most pronounced decliner, as an exclusive deal with Netflix to carry four series based on Marvel superheroes failed to impress. Disney also pushed back the release date for Star Wars: Episode VII to December 2015 from summer 2015 and didn't wow anyone with the financial performance of their TV networks in the recent quarter. That sure sounds like a lot of negatives, but with some of the most recognizable entertainment assets in the world to its name, I still like Disney stock as a long-term investment.
Midwest grocer Roundy's (NYSE: RNDY) fell 5.7% today after reporting third-quarter results on Thursday. The company has a ways to go before getting the name recognition Disney has, but its stock does have Disney's number in one area: dividends. The board of directors approved a $0.12 quarterly dividend yesterday, which translates to a 5.6% annual payout for investors. There's just a few, pretty serious problems with that scenario. (1) Roundy's has three times more debt than equity, and (2) Roundy's sales and net income aren't exactly skyrocketing.
Lastly, shares of American Eagle Outfitters (AEO 4.16%) soared 6.3%, posting a second straight day of robust gains after giving third-quarter guidance that showed relative strength in relation to its competition. Keep in mind that American Eagle's announcement yesterday was only guidance, and the company doesn't officially report until December 6. That said, earnings and sales guidance rose, a slap in the face to bitter rival Abercrombie & Fitch, which sold off heavily Wednesday after full-year earnings projections fell more than 50% from previous forecasts.
