Some said the Mayan calendar forecast that the world would end on Dec. 21, 2012. Roughly 2,000 years later, in a similarly definitive manner, the chief investment strategist of Raymond James, Jeff Saut, predicted that President Obama's State of the Union address could trigger a massive 5% to 7% sell-off in stocks.
Both predictions now appear to have been the result of miscalculations. With about an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES:^DJI) is off by a negligible 64 points, or 0.46%.
What's moving the market today?
Two reports appear to be weighing on stocks today. First, the Department of Commerce published its estimate of January retail sales this morning. According to the report (link opens PDF), total domestic retail and food services sales increased last month by 0.1%. While this doesn't sound overly impressive, as my colleague John Divine pointed out, "the $416.6 billion spent in the area is 4.4% higher than the January 2012 figure."
And second, the Mortgage Bankers Association published data showing that mortgage applications fell by 6.4% last week compared with the preceding seven-day period. The likely cause for the fall was higher interest rates. As I noted earlier today, according to the MBA's data, the average interest rate on home loans ticked up by six basis points to 3.73%.
In terms of individual stocks, General Electric (NYSE:GE) is the best-performing component of the Dow, up more than 3% in afternoon trading. The move follows the announcement that cable giant Comcast will buy the remaining 49% of GE's NBCUniversal unit, of which Comcast already owns the majority stake. GE said it will distribute the proceeds to shareholders through buybacks and dividends. Click here to read fellow Fool Dan Dzombak's take on the deal.
Conversely, shares of McDonald's (NYSE:MCD) are down 1.4% at the time of writing, making it the worst-performing stock on the Dow. Many analysts are tying the drop to Obama's call for an increase in the minimum wage. "If this were to happen," fellow Fool Matt Thalman said, "the fast-food industry, which employs masses of minimum-wage workers, would take a big hit. The industry is already dealing with higher food costs, so an increase in labor could really hurt margins and overall profits."
Finally, shares of Caterpillar (NYSE:CAT) are down more than 1% after its principal domestic competitor, Deere (NYSE:DE), reported earnings for its fiscal first quarter. While Deere beat estimates, analysts focused on its cautious forward outlook.
CEO Samuel Allen commented:
We're confident our investment in new products and additional capacity will help Deere fully capitalize on the world's growing need for food, shelter and infrastructure in the years ahead. However, the near-term outlook is being tempered by uncertainties over fiscal, economic and trade issues that are undermining business confidence and restraining growth.
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Are you at ease...or nervous? It's been a great five-year run for investors, with the Dow and S&P at or near all-time highs. Yet fears abound. When will the next downturn hit? Will political gridlock lead to portfolio-killing inflation? To learn how to protect your portfolio, click here for free guidance from the Motley Fool Pro Academy!
John Maxfield has no position in any stocks mentioned. The Motley Fool recommends McDonald's. The Motley Fool owns shares of General Electric Company and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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