Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
After a blistering start to this week -- in which the Dow Jones Industrial Average (DJINDICES:^DJI) soared more than 400 points in just three days -- the index cooled down Thursday, ending with modest losses. But why on earth would stocks retreat with jobless claims reaching seven-year lows last week? Simply put: The fresh numbers failed to impress Wall Street because they were utterly meaningless. Two unidentified states misreported data because of changes to their computer systems.
With strong gains already this week and no clear catalyst to justify another big day, the Dow dropped 25 points, or 0.2%, ending at 15,300. Disney (NYSE:DIS) stock, however, would not succumb to such a listless attitude.
Shares of Disney climbed 2.4% today as its CFO announced broad share buybacks planned for next year. The logic behind the move is simple: Disney likes its prospects moving forward, and is confident in the strength of its film pipeline. Of course, it's not hard to be confident with full ownership rights to the Star Wars franchise, but the stock buyback, which could run from $6 billion to $8 billion, should be somewhat reassuring for shareholders.
Verizon Communications (NYSE:VZ) gained 1.8%, as its massive $49 billion bond issue dominates the headlines. The record debt offering was ostensibly at risk of flooding the credit markets, but creditors happily lapped up the notes, sending the 10-year interest rates from about 5.2% to less than 4.8%. While high debt levels often make equity investors cringe, Verizon shareholders can rest easy knowing that these funds help the company regain full control of its lucrative U.S. wireless business.
Carl Icahn, the activist investor who officially lost the battle for control over PC giant Dell Thursday, wasn't the only loser in the $25 billion deal that takes the company private. Wall Street sees Hewlett-Packard's (NYSE:HPQ) business potentially taking a hit with the newly private competitor, and HP shares shed 1.4% Thursday. Private companies are blessed with the ability to operate without the relentless quarterly pressures to perform for public stockholders, a dynamic that can encourage a short-term focus on success. UBS lowered its price target for HP shares from $28 to $24 per share.
Lastly, JPMorgan (NYSE:JPM) lost 1.9% as concerns over rising interest rates continue to impact shares. Rates didn't rise today, but the company's CFO warned investors just days ago of a potential $15 billion loss in its bond holdings should rates jump 2%. It's nice that JPMorgan recognizes this risk already, but with rates unlikely to go much lower, it might want to start mitigating that risk.
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