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Jobless Claims Report Pushes Stocks Higher

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.

The latest weekly jobless claims report from the Labor Department today just missed meeting expectations, showing a very solid 336,000 new claims versus analysts' projection of 335,000. The new figure represents a 3,000 claim decline from the previous week, which many economists say should be seen as a win because it shows that even with the bad weather and a slowdown in business, workers are not being laid off.  

With that economic news and help from a number of solid earnings reports, as of 1:05 p.m. EST the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up 112 points, or 0.70%, the S&P 500 was higher by 0.61%, and the Nasdaq had risen 0.48%.

Tesla's latest earnings report is certainly helping push the markets higher, while Wal-Mart's (NYSE: WMT  ) report drove the retailer's stock down 1.8%.

The world's largest retailer posted fourth-quarter revenue of $129.71 billion, while analysts were looking for $129.52 billion. Earnings per shares came in at $1.60, above the $1.59 Wall Street was looking for. So what's the problem? Same-store sales declined 0.4%, comparable traffic fell 1.7%, and guidance for the future was below what analysts wanted to see. For the first quarter of 2014, management believes it will post EPS within a range from $1.10-$1.20; the Street was looking for $1.23. For the full year, management gave a range from $5.10-$5.45, while the consensus estimate had been $5.55.  

Furthermore, it is now also being reported that Wal-Mart may increase its minimum wage, ahead of any government action. Wal-Mart officials have stated they are neutral on the issue, but that management is considering the benefits of raising hourly wages nationwide. Investors may not like such a move, especially during a time when same-store sales and traffic are falling and growth outside of building news stores seems extremely difficult. The higher costs associated with a higher minimum wage will likely hurt profit.

Another company considering raising its minimum wage ahead of any government mandate is Gap (NYSE: GPS  ) . The retailer said yesterday that it would this year increase the minimum wage for all employees to $9 per hour and then to $10 in 2015. This will affect 65,000 employees nationwide. Shares of Gap were up 0.6%, indicating investors are likely not that concerned about the increase in cost.  

Another retailer making news today is J.C. Penney (NYSE: JCP  ) as an analyst at Sterne Agee removed his $3 price target on the stock altogether. This indicates that Sterne does not believe J.C. Penney has much longer to survive as a freestanding company. Analyst Chuck Grom noted that he believes the company will have a credit crisis in the near future, and shares will plummet. A credit crisis also likely means the company will have to file for bankruptcy, a bad sign from which few organizations emerge. Penney shares were down 5.2% by early afternoon  

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Matt Thalman

Matt primarily covers the Dow Components, the Major Indexes daily moves, Consumer Goods stocks, and General Investing Topics.

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Related Tickers

9/4/2015 4:30 PM
^DJI $16102.38 Down -272.38 -1.66%
GPS $32.41 Down -0.60 -1.82%
Gap CAPS Rating: ***
JCP $9.68 Up +0.04 +0.41%
J.C. Penney Compan… CAPS Rating: *
WMT $63.89 Down -0.97 -1.50%
Wal-Mart Stores CAPS Rating: ***