Lululemon Falls and Hilton Checks In While Dow Hits 5-Week Low

Maybe you should try these eight tips to win your holiday office party -- because all Wall Street's been doing recently is losing. The Dow (DJINDICES: ^DJI  ) fell 104 points Thursday for its third straight drop as investors keep worrying that the Federal Reserve will slow its stimulus policies.

1. Hilton Hotels checks in for IPO
It doesn't take a graphic viral video to get the Hilton name back in the news again. Hilton, which operates 4,000 hotels worldwide, raised $2.3 billion through the biggest-ever hotel initial public offering, selling its shares on the New York Stock Exchange's open market Thursday under the ticker "HLT." Shares of Hilton (NYSE: HLT  ) stock popped 9% in their trading debut (enough to make Nicole Richie jealous).

The takeaway is that this isn't Hilton's first stay in the public markets -- the company founded in 1919 was traded publicly until private equity firm Blackstone used U.S.$26.7 billion in debt to buy Hilton and take it private in 2007. The recession of the early 2000s hurt the hotel and travel industries hard, but the post-2008 financial recovery has helped room rates and occupancy levels rise, and now Hilton's looking for an upgrade.

2. Lululemon drops on more sales drama
Nothing's fitting right for Vancouver-based Lululemon (NASDAQ: LULU  ) . Shares of the yoga-pants supplier that looks like it sponsors every girl in your gym dropped 11.65% Thursday after a disappointing quarterly earnings report. Although sales grew over the last three months for a profit, Wall Street didn't like the fact that Lulu also lowered its sales forecast for the remainder of the year -- including the almighty holiday shopping season.

The takeaway is that 2013 just hasn't been a good look for Lululemon. First, its see-through yoga pants debacle last spring cost the company $60 million. And as you read in MarketSnacks earlier this week, founder Chip Wilson is exiting as chairman after claiming Lulu pants just don't work on "some women's bodies." The company announced that the CEO of Tom's Shoes is taking over in January, but Wall Street just hasn't liked Lulu's style lately.

3. The House passes bipartisan budget deal
It's not quite official yet, but the budget agreement proposed on Tuesday just took another big step Thursday to becoming the real deal. The House voted easily 332 to 94 to approve the bipartisan plan, which will now head to a final vote by the Senate next week. Timing is key here because Congress gets as much winter break time off as middle schoolers -- so unless the deal's done pre-holidays, there could be another government shutdown in January.
So what's in the plan? To quote our college lacrosse coach, the "meat and potatoes" of the compromise is that Congress avoids another awkward government shutdown for at least two years. For Democrats, the bill increased Congress' spending power by $62 billion over the next two years to slow the impact of recent government cuts, and for Republicans, Guantanamo stays open and the Pentagon gets some serious cash.

So why does Wall Street care? Because investors like stimulus policies as much as Popeye likes an all-you-can-eat bar mitzvah spinach buffet. Since the '08 financial crisis, the Federal Reserve has been using stimulus measures to keep interest rates low to encourage borrowing, boosting the economy. Although a budget resolution is good for the economy, too, Wall Street worries that it also might mean a quicker end to the Fed's oh-so-kind stimulus support.
 
MarketSnacks Fact of the Day: In addition to the Great Wall of China, you can also see Chinese fog from space.
 
As first published on MarketSnacks.com.

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