and Wal-Mart Do a Rattled Dow no Favors

The blue chips gave up 150 points as both Amazon and Wal-Mart reported disappointing fourth-quarter results.

Jan 31, 2014 at 10:00PM

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 closed out January with a whimper as the Dow Jones Industrial Average (DJINDICES:^DJI) and S&P 500 finished with their worst month in nearly two years. By the time the market closed today, the blue chips were 5.3% lower than they were at the start of the year while the broad-market index was down 3.6%, primarily due to an emerging-market currency scare and the Fed's decision to continue with its bond-buying taper. For the day, the Dow fell 150 points, or 0.9%, while the S&P dropped 0.7%. American stocks were again rattled by emerging-market woes as the Russian ruble and Polish zloty both fell today, and investors seemed to overlook otherwise strong economic reports from home. The University of Michigan said consumer confidence had edged up to 81.2, slightly ahead of expectations, while Chicago PMI also beat projections, hitting 59.6, indicating a robust expansion of manufacturing activity in the Midwest this month.

Two retail giants also released underwhelming reports today, which likely affected the market's perception of the economy's direction.

First, Wal-Mart (NYSE:WMT) updated its guidance for the current fiscal year, saying it now expects its fourth-quarter EPS to come in at or slightly below the low end of its previously guided range of $1.60-$1.70, and consequently, for full-year EPS to be at or slightly below $5.11-$5.21. Considering the bloodbath experienced by many retailers during the holiday season, perhaps hitting the low end of guidance isn't such a defeat. Wal-Mart also said comps at U.S. namesake stores and Sam's Clubs would be slightly negative as the company blamed a reduction in the food-stamp program and bad weather for the poor results. Considering nearly 10% of all non-automotive consumer dollars are spent at Wal-Mart, the company is often seen as a bellwether for the economy as a whole. Shares traded down more than 1% this morning, but finished off just 0.1%.

Likewise, (NASDAQ:AMZN), the biggest threat to Wal-Mart, said holiday-season results were short of analyst expectations, falling 11% as a result. Sales grew 20%, to $25.6 billion, while the Street was expecting 22% growth to $26.1 billion, and earnings also missed, coming in at $0.51 against estimates of $0.66. Amazon notoriously downplays quarterly results, but with its tentacles reaching far into industries beyond traditional retail, the company's results also speak meaningfully about consumer spending habits and the economy's trajectory. If both Amazon and Wal-Mart are losing, it's no surprise to see the overall retail industry suffering. In an economy where 70% of GDP is based on consumer spending, those companies need to be succeeding for stocks to move up further.

Can Amazon destroy Wal-Mart?
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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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