Markets Bounce Back After Yesterday's Decline

Home Depot and Lowe's fall on weak housing data, but Walgreen and McCormick climb after posting strong results.

Mar 25, 2014 at 1:00PM
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After starting the week off lower, the three major U.S. indexes are mixed today. As of 1 p.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 73 points, or 0.45%, the S&P 500 rose 0.24%, and the Nasdaq was down 0.06%.

Economic news this morning came in the form of the Conference Board's reading of consumer confidence, Case-Shiller Home Price Indices, and new home sales for February. The Conference Board's 82.3 reading indicated consumer confidence was up in March after February's reading of 78.3. The Present Situation index moved lower, but the Expectations index rose higher, which is a good sign for the future.  

The Case-Shiller index indicated that housing prices in January rose by 13.5% in the 10-city composite and 13.2% in the 20-city composite when compared to the same time frame the previous year. While the 10-city composite remained relatively the same when compared to recent months, the 20-city composite fell 0.1% for its third consecutive monthly decline.  

New home sales for February came in at a seasonally adjusted 440,000, below analysts' expectations of 445,000 and a 3.3% drop from the previous month. Both the new homes sales figure and the Case-Shiller reading indicate that the housing market is weakening, which is not a good sign for the economy or home improvement chains such as Home Depot (NYSE:HD) or Lowe's (NYSE:LOW). Shares of Home Depot are down 0.4% while Lowe's is off by 1.6% today. The two companies need a strong spring, which is when most home improvement projects take place. But if housing data doesn't soon improve, and consumers confidence doesn't rise, homeowners may hold off on putting more money into a diminishing asset, thus hurting the retailers' sales figures.

Meanwhile, Walgreen (NASDAQ:WBA) shares were up 2.4%. The company's quarterly report, issued before the opening bell today, showed sales of $19.6 billion and earnings $0.91 per share. Analysts were looking for revenue of $19.61 billion and earnings per share of $0.93. Earnings also came in lower than the $0.96 per share reported for the same quarter last year. The good news, though, was that same-store sales rose 4.3% and overall sales were up by 5.1%.  

Another big winner after reporting quarterly results this morning was spice company McCormick (NYSE:MKC). Shares were up nearly 6% after the company posted revenue of $993 million and earnings per share of $0.62. Wall Street was looking for sales of $973.2 million and earnings per share of $0.58. Management believes sales will grow between 3% to 5% during this fiscal year. Investors flock to this stock because of it operates in a boring industry and offers stable growth and a solid dividend.  

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Matt Thalman owns shares of Home Depot. The Motley Fool recommends Home Depot. 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.

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