Stocks surged today, jumping late after the minutes from the last Federal Reserve meeting were released. The notes showed the committee members unanimously agreeing that the thresholds it had been using for guidance on raising interest rates were no longer realistic. Former Chairman Ben Bernanke had said many times that the Fed would keep borrowing rates at a minimum until unemployment fell to 6.5% or inflation reached 2.5%. However, with the unemployment rate now at 6.7% and fast approaching 6.5%, the Fed seemed to believe that the economy still needed support. Most of the members said they favored "replacing the numerical thresholds with a qualitative description of the factors that would influence the [Federal Open Market Committee's] decision to raise the federal funds rate," according to the minutes. As a result, the Dow Jones Industrial Average (^DJI -0.12%) jumped 181 points or 1.1%, wile the S&P 500 gained by the same percentage, and the Nasdaq shot up 1.7%.
Among stocks reporting earnings today was Bed Bath & Beyond (BBBY), which fell 5% after its outlook disappointed the market. The housewares retailer said revenue fell 6% to $3.2 billion as it lost a week in the calendar, just shy of estimates at $3.22 billion, while earnings of $1.60 per share matched expectations. Same-store sales actually increased 1.7% in the quarter, indicating that problems seemed to come on the cost side of the equation, as its EPS was down from $1.68 the year before. The company had earlier warned that poor winter weather would put a damper on its quarterly results, which may explain the lower profits, but guidance was also weak. Management said it expects earnings of $0.92-$0.96 for Q1 2014, and a mid-single-digit increase in EPS for the full year. For the current quarter, analysts had projected an EPS of $1.02, and saw a 10% increase for the full year.
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Elsewhere, Ruby Tuesday (RT) shares soared 12% after beating estimates on the top and bottom lines in its quarterly report. The restaurant chain saw a per-share loss of $0.07 in its third quarter against estimates of an $0.08-loss, while revenues dipped 3.8% to $295.6 million, but that was much better than the consensus at $284.8 million. Same-store sales fell 1.9% as the company continues to close down underperforming locations. CEO JJ Buettgen said the company made "solid progress" on its brand transformation strategy as results improved sequentially. For the current quarter, Ruby Tuesday expects flat same-store sales and six to nine store closures, bringing the total in the second half of the year to 30 to 33. Investors seem to agree with Buettgen, sending the stock up double digits today, and the prospect of same-store sales recovering looks encouraging. If that figure comes up positive in its next report, shares could see another big rally.
