Please ensure Javascript is enabled for purposes of website accessibility

This Is the Reason the S&P 500 Slumped

By Sean Williams - Dec 14, 2012 at 6:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P 500 shakes off positive economic news to finish decisively in the red.

I think my Foolish colleague Dan Carroll hit the nail on the head when he stated that, "Today's good news is no news."

Factory output data for November showed a 1.1% rise, as production in the wake of Superstorm Sandy rebounded, pushing total output to an eight-month high. The U.S. Consumer Price Index, a measure of inflation, also fell 0.3% in November, as cheaper prices at the pump helped keep a few more dollars in consumers' pockets.

Yet, the market largely ignored this data and, instead, chose to focus on the fiscal cliff, which sits just a tad over two weeks away. For the day, the S&P 500 (^GSPC 2.47%) finished lower by 5.87 points (-0.41%), to end at 1,413.58.

The big news story of the day was Apple (AAPL 4.08%) which demonstrated to investors that if the tech giant falls in a forest, its shockwave could shake the leaves off all of the trees, whether or not anyone is around to witness it!

Apple shares took a beating after the company's lackluster iPhone 5 debut in China, and iPhone sales estimates cuts from two Wall Street analysts. Specifically, analyst Peter Misek at Jefferies notes that Apple has already begun to pare orders to suppliers in order to balance out its inventory, which could result in lower shipments. Apple shares only dipped 3.8% on the day, but its mobile device suppliers, like Jabil Circuit (JBL 3.71%) which makes the aluminum casing for the new iPhone 5, were creamed to the tune of 5.5%.

Luckily for Apple, it wasn't the only downside headliner, as Best Buy (BBY 2.36%) reversed course, down 14.7%, after gaining a similar percentage yesterday. Although a potential buyout of the big-box retailer by its founder, Richard Schulze, in the neighborhood of $5 billion-$6 billion still remains a very viable possibility, the fact that Best Buy's board and Schulze had to amend and extend their cooperation agreement until Feb. 28th could signal that Schulze is having trouble arranging the financing to take the company private. My personal opinion is that we're going to see a deal get done one way or another.

If you're looking for a silver lining in the clouds, that would be software maker Adobe Systems (ADBE 4.80%), which rose 5.7%, after reporting its fourth-quarter earnings results. Admittedly, this was a very confusing report, as it handily beat Wall Street's fourth-quarter expectations, but issued EPS and sales guidance that wasn't even close to the Street's first-quarter forecast ($0.29 and $975 million versus $0.56 and $1.07 billion). What's pushing the stock higher is its 132,000 new Creative Cloud software subscriptions. Although its move into the cloud could challenge revenue in the near term, Adobe looks poised to capture its piece of the cloud-computing pie.

Let the good times roll?

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,158.24 (2.47%) $100.40
Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.64 (4.08%) $5.86
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$83.99 (2.36%) $1.94
Jabil Circuit, Inc. Stock Quote
Jabil Circuit, Inc.
JBL
$61.98 (3.71%) $2.22
Adobe Inc. Stock Quote
Adobe Inc.
ADBE
$428.22 (4.80%) $19.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.