It hit another record, folks. Early in trading yesterday, the Dow Jones Industrial Average (^DJI +2.85%) outdid itself once again to claim a new multiyear record. But with the good comes the bad, and later in trading the index fell a total of 216 points -- 154 in the final hour of trading alone. Economic, international, and earnings news are the driving forces behind the index's resemblance to a heart-rate monitor this morning.
Economic
Great news this morning regarding the housing market spurned on some increased trading. Both the Case-Shiller and FHFA home price indexes showed growth in December. C-S reported a 0.9% increase since November and a 6.8% improvement year over year -- the largest yearly gain seen since 2006. The FHFA reported similar numbers, with a 0.6% gain over November's results and a 5.5% yearly improvement. Consumer confidence data was also released this morning, with a big improvement in February. The index jumped 11.2 points to 69.6 from January's 58.4 -- a reverse of the slide in confidence we've seen over the past three months.
Based on this positive news, the market spiked in early trading, with the Dow reaching 13,908 just after 10 a.m. ET. But another factor dissolved that gain -- Fed Chairman Ben Bernanke's semiannual testimony before the Senate Banking Committee. This morning and tomorrow, Bernanke is expected to touch on the Fed's current QE policy. Investors may have had a knee-jerk reaction, causing a sudden drop for the index. But news that Bernanke signaled the continuation of the stimulus program reversed any break in investor confidence -- the index is back on the upswing.
International
Also plaguing the markets is the uncertainty surrounding Italy's elections for control of the Senate. Though it appears that the country's center-left coalition won a narrow victory for the lower-house of the Parliament, there is no clear winner for the Senate, causing concern that the absence of a majority will result in an ineffective government -- and jeopardize the European economy's struggling recovery.
Earnings
Home Depot (NYSE: HD) hit a home run with its earnings release last night, shooting the stock up 5%-plus so far this morning. The largest home improvement retailer reported increased revenue from the housing market recovery and from Hurricane Sandy-related sales. Depot beat analyst estimates pretty handily and continued to outshine its biggest rival, Lowe's, for the 15th consecutive quarter. The retailer also announced that it would be increasing its dividend by 34% to $0.39 per share, along with a $17 billion share repurchase authorization.
Other winners
Wal-Mart (WMT +3.78%) is also on the rise this morning. After a tough day yesterday, investors may have reverted to the belief that as the economy weakens, Wal-Mart is strengthened -- aka the Wal-Mart Indicator. But there are other factors, such as the truth behind the retail giant's slogan "Everyday low prices." A study was started in 2009 to measure the gap between prices at competing retailers. A recent update to the study shows that Wal-Mart's "self-funded" prices allow the behemoth to maintain large price gaps that undermine its competitors, like Target (TGT +3.01%). The most recent results showed a 4% difference between the two retailers, the largest gap since 2009. Target hasn't had a lower-priced sample than Wal-Mart since 2011.
Intel (INTC +11.42%) is also up this morning as the techie continues to push its new dual-core Atom System on Chip platform for smartphones and tablets, called Clover Trail+. Intel has been a latecomer to the mobile game, but will also be offering a new 4G LTE modem that can support multiple devices -- all in an effort to steal back some of the market share from ARM. Intel has also taken another big step, by agreeing to manufacture chips on behalf of Altera, in a move that will open up its impressive manufacturing capabilities to customers on a large-scale basis. This may allow Intel to begin fighting for a spot at the Apple table -- a very lucrative place for a tech manufacturer to be.
