Dow Falls Again as J.C. Penney Tanks, but Conn's Jumps

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.

Who will win in 2014?
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!


Read/Post Comments (0) | Recommend This Article (1)

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: 2754613, ~/Articles/ArticleHandler.aspx, 12/21/2014 2:28:22 PM

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