Dow Snaps Win Streak on Mixed Econ Data, While Barnes & Noble Inc Tanks

Thursday, investors sold just enough to sink the Dow Jones Industrial Average  (DJINDICES: ^DJI  )  a fraction of a point, snapping a solid four-day winning streak.

1. U.S. trade deficit widens in February (the Olympics didn't help)
Trading can be tough. The Commerce Department reported Thursday in its highly anticipated monthly evaluation that the U.S. trade deficit (simply the amount of goods we import vs. export) surprisingly widened to $42.3 billion in February, up from $39.3 billion in January. To make matters more awkward, analysts had been expecting the deficit to narrow.

Wake up, it's ECON 101. International trade is one factor in measuring the economy's mightiness. Buying things from abroad means we're just being lazy, but making stuff here, and shipping it to other countries is what it's all about. The total deficit of $42 billion is straight up subtracted from the rest of our economic output in order to calculate our Gross Domestic Product. Falling demand abroad for "Made in the USA" stuff hurt exports, and is bad news for the economy. 

Interestingly, we can blame rising imports on the Olympics (and not because the U.S. men's hockey team didn't crush Canada). While imports climbed by $1 billion, there was a sizable 2.1% jump in "service" imports, which turned out to represent payments for the rights to broadcast the Winter Olympic games in Sochi. So Wall Street didn't worry too much as investors expect that blip to disappear in the March report.

2. U.S. Non-manufacturing sector grows in March
Ready for more data? Right after February's bad export report, investors got the boost they needed with a positive report for the U.S. service industry in March. The ISM report on Non-Manufacturing activity jumped from 51.6 to 53.1 in March. It made Wall Streeters feel good about that steam room/massage/FroYo lunch break they took. ("Yo bro, I'm contributing to the service sector.")

The ISM report is based on a survey of more than 400 business managers within 60 sectors -- none of which are manufacturing sectors. The rating of 53.1 means that these managers are seeing growth in business, as anything above 50 indicates expansion. The U.S. economy is about 90% non-manufacturing. More business today means more profits for shareholders of non-manufacturing companies tomorrow, so Wall Street was as relaxed as the soothing massage music from the lunch break.

3. Barnes & Noble gets hammered after major investor bails 
Liberty Media is out when it comes to owning Barnes & Noble (NYSE: BKS  ) . The publicly traded investment company Liberty Media (NASDAQ: LMCA  )  announced Thursday it's selling almost all of its stake in the only big bookstore chain left. Bookworms and shareholders felt betrayed, and the stock was the loser of the day, falling 14% on the news.

In 2011, things were looking good for Barnes & Noble. After decades of running a standard and unchanged bookstore business, suddenly the company developed its own e-reader: the Nook. The Nook is a less-popular version of the Kindle. Liberty Media invested more than $200 million in Barnes & Noble thinking the company had the innovation it takes to survive, but it has struggled to gain market share vs. giants Google, Apple, and Amazon.com, which all offer similar products.

It turns out Nook < Book. Barnes & Noble has created fun Nook crannies (see what we did there?) in their retail stores, and it continues to develop new models, but the losses are in the hundreds of millions. Just as its retail book business is actually picking up this year (the stock was up 48% in 2014 going into today), the news of a major investor bailing and the performance of the Nook are hits to investor confidence. Liberty will sell nearly all of its stock and remove two of its members from Barnes & Noble's Board of Directors.

Friday:

  • The big March Jobs Report from the U.S. Department of Labor

MarketSnacks Fact of the Day: Texas has the most Chick-fil-A restaurants, with 270, while New York has only one.

As originally published on MarketSnacks.com

The Motley Fool's completely free report on three Dow stocks to buy today
If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2902731, ~/Articles/ArticleHandler.aspx, 12/18/2014 12:31:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement