Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Expect a lower start to the stock market today, as the Dow Jones Industrial Average (^DJI 0.75%) is set to fall by 35 points at the opening bell following its painful 129-point drop yesterday. JPMorgan Chase (JPM 1.27%) is making headlines for the wrong reasons again this morning, while lululemon athletica (LULU 0.96%) sees a flat holiday quarter ahead, and Facebook's (META 2.87%) stock has found a new home.
JPMorgan will have to pay $2 billion in penalties and face a criminal action for its role in Bernard Madoff's billion-dollar Ponzi scheme, according to The New York Times. While the settlement doesn't include a formal indictment, a major Wall Street bank had never previously faced an agreement of this type. JPMorgan also earned the dubious record of most fined bank in history earlier this year when it agreed to pay a $13 billion settlement tied to its selling of mortgage-backed securities leading up the financial crisis. While this most recent deal allows the megabank to move forward, the key question for investors is whether JPMorgan has changed the culture that allowed these failures in the first place. The stock is unchanged in premarket trading.
Next, lululemon beat top and bottom-line earnings estimates this morning while offering a weak outlook for the holiday season. Revenue for its third quarter rose by 20% to $379 million on the back of a solid 5% comparable-store sales bounce. Profit increased to $0.45 a share, above Wall Street's $0.41 target. However, the company forecast sales of just $540 million for the holiday quarter, which would mark an 11% rise over the prior period and would be lululemon's slowest growth rate since 2009. Comparable-store sales are also expected to be flat in the holiday quarter, which suggests that its new CEO will have some big challenges to face next year. Lulu's stock is down 10% in premarket trading.
Finally, Facebook shares are up this morning after Standard & Poor's announced that it would add the social networking company to its S&P 500 stock index next week. The move has no impact on Facebook's business or earning potential, but it will likely increase demand for the stock over the short term. For the shares to outperform in the years ahead, though, Facebook needs to show that it can keep users engaged while finding ways to expand the market for advertising on mobile devices. The stock is up 3.8% in premarket trading.
