J.C. Penney Stock Roars Higher, Melco Crown Tumbles on Macau Tie-Ups

Home Depot helps lead the Dow higher on strong housing data; Russia sanctions fail to spook the stock market today.

Apr 28, 2014 at 6:15PM

Stocks wavered today as the European Union and the U.S. each increased economic sanctions against Russia. While intended to dissuade Russia's aggressive actions in Ukraine, the showdown between Russia and the West is looking more like a game of poker than a diplomatic crisis. Russian stocks actually advanced on Monday, as the EU only cut ties with high-level individuals, neglecting to punish Russian businesses. Wall Street eventually shrugged off the sanctions as well, focusing instead on stronger than expected economic data. The Dow Jones Industrial Average (DJINDICES:^DJI) finished up 87 points, or 0.5%, to end at 16,448. 

Home Depot (NYSE:HD) shares aided the Dow's ascent today, tacking on 1%. Home Depot's success is inextricably tied to the health of the real estate market, so investors were delighted to hear that pending home sales unexpectedly broke a nine-month decline last month, advancing 3.4% in March. A pending home sale occurs when an existing property goes under contract, so March's sharp trend reversal shows that buyers and sellers are finally getting on the same page, just as spring rolls around. Of course, the perennial question still arises: will Home Depot offer investors more compelling returns in the long-run, or will Lowe's? At the moment, Home Depot's scale, cash on hand, capital structure and dividend all seem to rule in its favor

Not all industries were flush with good news on Monday; gaming stocks took a tumble as news of corruption in Macau worried investors. Shares of Melco Crown Entertainment (NASDAQ:MPEL) took an especially hard hit, tumbling 6.6%. The fears lie with the bad PR surrounding shady Macau junkets -- third-party operators that bring big groups of people to the casinos in exchange for a fee. A bad apple associated with the junkets reportedly stole off with over $1 billion earlier this month, a swindle that could tighten up credit and slow down business for Melco Crown and other casinos going forward.


Source: company website

Though few stocks are more volatile than those in the gambling industry right now, J.C. Penney (NYSE:JCP) stock certainly gives casino shares a run for their money. The stock is extremely sensitive to even the smallest new pieces of information as the company attempts to reverse a dramatic decrease in business in recent years. Turnaround hopes were bolstered today, and the stock surged 9%, as apparel titan PVH Corp. said its business with J.C. Penney was coming along quite nicely. That's a great new piece of information for investors, since PVH is behind a number of high-volume, popular brands you may have heard of, from Calvin Klein to Tommy Hilfiger to Izod.

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John Divine has options on J.C. Penney. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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