This morning it looked as if we were headed on another ride downward, but after the 10 a.m. EST release of the University of Michigan's consumer sentiment numbers, the Dow Jones Industrial Average (Index: ^DJI) is moving higher. As of 12:40 p.m. EST, the Dow is at 12875, up 66 points, or 0.52%. The report shows that consumers' perceptions of the economy and jobs is at the highest level in five years. This has given investors a confidence that has been lacking over the past few days and caused the Dow to drop a few hundred points in just two trading sessions.
Today, only five of the Dow's 30 components are in the red, with three of the biggest losers being McDonald's (NYSE: MCD), Disney (NYSE: DIS), and Wal-Mart (NYSE: WMT).
So why are they down?
Yesterday, McDonald's announced that same-store sales in the month of October had fallen 1.8%. The decline marked the first time since March of 2003 that the company experienced a monthly decline in sales. Some analysts have noted that this past October had one less weekend than October of 2011, but most of them believe that the company's growth is simply slowing. With all the issues in Europe – where McDonald's receives 40% of its revenue – the company may continue to face declining year-over-year sales. That's not something shareholders like to see, and while McDonald's shares are down 0.73% today, the company continues to be the dominate player in the fast food world. Selling shares now will likely turn out to be a big mistake over the long run.
Walt Disney announced third-quarter earnings yesterday after the market closed; although net income rose 14% from a year ago, Disney is the Dow's biggest loser today with shares trading down 5.38%. The company announced that rising costs will hurt results in the coming quarter. Management also stated that Disney was entering a "transition year" – it will be moving more from investment mode to growth mode by taking the investments it has made over the past years and focusing on expanding opportunities.
Lastly, shares of Wal-Mart are trading lower by 0.11%. Wal-Mart, together with hundreds of other retailers, is back in court today, fighting the credit card companies on a $7.25 billion settlement. The retailers have claimed that card companies and banks illegally fixed the swipe fee that card companies charge retailers every time a customer uses plastic. The card companies have offered to settle the case for $7.25 billion, but the retailers claim that it's not enough and problems still exist. In addition to the money, more transparency and the ability to add more competition would suffice for most retailers.