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 fell once again today despite strong economic data as those positive reports seemed to add fuel to fears that the Federal Reserve would begin its stimulus taper sooner than expected. Atlanta Fed President Dennis Lockhart also said trimming the bond-buying program should be "on the table" at the Fed's next meeting in two weeks. The drumbeat of disappointing news from retailers continued today as well, pushing down the broad market, as several companies issued weak holiday-quarter guidance. As a result, the Dow Jones Industrial Average (DJINDICES: ^DJI ) fell 68 points, or 0.4%, while the S&P 500 slipped by the same percentage.
Among the economic reports making headlines was third-quarter GDP growth jumping to 3.6% from 2.8% in the Commerce Dept.'s second estimate of the nation's economic growth. Private inventory investment was the major reason the number improved, though that could mean Q4 GDP may swing in the opposite direction if consumption does not keep pace. Elsewhere, initial jobless claims for last week fell to just 298,000, below the total the week before of 321,000 and much better than estimates of 330,000. The report bodes well for tomorrow's November jobs report, especially after the ADP said yesterday that 215,000 jobs were added last month.
J.C. Penney (NYSE: JCP ) shares fell sharply once again today, declining 8.4% after Wells Fargo suggested that the struggling retailer may be in too deep of a hole to recover. The banking giant noted that Penney's same-store sales had improved 10.1% in November, but said that the number was inflated by extenuating factors such as Hurricane Sandy's impact last year. Separately, Hayden Capital Management sold all of its 11.4 million shares, or 5.2% of stock outstanding. The positive comps may seem like a promising sign, but J.C. Penney still has steep losses ahead of it, and its near-$5 billion debt burden backs it into a corner it may have trouble escaping, according to Wells Fargo.
One retailer bucking the recent negative trend was Conn's (NASDAQ: CONN ) , whose shares shot up 19% on a stellar earnings report. The big-box retailer reported a same-store sales jump of 35% in its third quarter as earnings per share jumped from $0.38 to $0.71, beating estimates of $0.64. The company's full-year EPS guidance of $2.75-$2.80 was also ahead of the experts' view at $2.60. With its store base set to expand by about 25% next year, there's a good chance the stock will move even higher, especially if comparable sales remain solid.
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