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 finished essentially flat today as the low-volume trading week between Christmas and New Year's carried on. The Dow Jones Industrial Average (^DJI 0.40%) finished up 26 points, or 0.2%, with the blue chips closing above 16,500 for the first time. Meanwhile, the S&P 500 fell just slightly, declining 0.3 points or 0.02%. In the only significant piece of economic data today, pending home sales grew 0.2% in November, lower than the 2.5% that analysts had forecast, but it was still the first increase in the metric in five months. The recovering housing market has been a major reason stocks have soared this year though rising mortgage rates may cool off the hot real estate market in 2014.
Disney (DIS -0.04%) shares led the Dow today, jumping 2.5% to help give the blue chips a win as the company got an upgrade from Guggenheim Partners. The analyst group lifted its rating on the entertainment giant to a "buy" and bumped up its price target to $87, noting "positive momentum" in Disney's recent acquisitions of Marvel, Pixar, and Lucasfilm. This has already been a stellar year for Mickey and Co. as shares have gained about 50% in on the strength of those acquisitions, the supremacy of its ESPN family of networks that provide a crucial barrier against so-called "cord-cutting," and growth in its theme-park business as the economy recovers. Its animated feature Frozen also raked in $28.8 million over the weekend even though it came out in theaters a month ago, showing that its studio division continues to be a hit factory.
Elsewhere, Crocs (CROX 1.53%) was one of the top-performing stocks of the day, finishing up 21% after getting a boost from Blackstone Group (BX). The investment group took a stake in the footwear-maker in the form of a $200 million worth of convertible preferred stock, which it plans to use along with cash on hand to buy back $350 million of stock. In the same announcement, Crocs said its CEO will step down in April, and it lowered its guidance for the fourth quarter, saying it now expects a per-share loss of $0.20-$0.23. Both of those are negative signs, but the market clearly overlooked them in favor of the Blackstone investment, and the proposed share repurchase, which would account for nearly a quarter of the company's market cap. Still, there are plenty of reasons to have concerns about the company's operations, and I'm not convinced that there's a compelling investment thesis, as this is now a slow-growth brand with no competitive advantages.
