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.
Just a day after home builder sentiment dropped to its lowest level since May, more data hit the markets, also depicting rough times ahead for real estate. Housing starts in January plunged 16% to an annual rate of 880,000, below the lowest end of consensus expectations by 19,000. Minutes from the Federal Reserve's most recent policy meeting also spooked investors on Wednesday, as the minutes revealed the central bank began debating when it should start raising rates. Discouraged by the specter of higher interest rates, the Dow Jones Industrial Average (^DJI -0.98%) lost 89 points, or 0.6%, to end at 16,040.
Shares of Home Depot (HD -0.31%) fell a modest 0.5% yesterday, but took a harder, 1.4% hit in Wednesday action. Home Depot stock finished near its daily low, suffering a slow, persistent tick downward in late afternoon trading on the release of the Fed minutes. Although January's disappointing housing starts also didn't help things, an unusually harsh winter -- often used as a poor excuse for weak economic data -- is actually relevant here. It's the chitchat about raising interest rates that could really dent the housing market and disrupt Home Depot's business.
But a mere 1.4% fall was nothing compared to Renren's (RENN) 5.6% slump. Shares of any unprofitable small cap Chinese social media business are bound to be volatile, after all, and Renren is no exception. Shares jumped 11% yesterday, only to shave off about half of those gains in Wednesday's bearish market. What concerns me about Renren is its undying focus on social media; the company used to own a Groupon-esque site called Nuomi that showed so much promise Renren disposed of it, selling it to China's search engine giant Baidu. I seriously wonder if Renren should have remained more diversified in case its other ventures don't pan out.
Finally, shares of Greek bulk shipper DryShips (DRYS) plunged 6.2% today after reporting disappointing quarterly earnings. Technically speaking, DryShips didn't even have quarterly earnings, since it lost more than $24 million in the period. While the $0.06 net loss per share exceeded the $0.02 per share analysts expected DryShips to lose, revenue jumped more than 50% in the quarter, driven by the staggering 165% sales growth in its oil tanker division.
