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.
The stock market rebounded from yesterday's decline Friday, starting November off with gains. Manufacturing appears to be chugging along nicely in the world's two most dominant economies. The Institute for Supply Management's factory index rose more than expected in October, while China's purchasing manager's index reached its highest level in 18 months. The Dow Jones Industrial Average (DJINDICES:^DJI), encouraged by the global strength, added 69 points, or 0.5%, to end at 15,615.
Despite the Dow's strength, Home Depot (NYSE:HD) slumped 1.2% today, ending as one of the five lonely stocks to lose ground in the index. There's nothing overwhelmingly negative putting pressure on the stock today, but since home-improvement retailers like Home Depot and Lowe's (NYSE:LOW) have significantly outperformed homebuilders this year, investors might be justified in closing that gap. Just because shares of home-improvement stores have done well this year, however, doesn't mean it's time to sell them off... at least not by any sensible logic.
Lowe's, which also fell 1.2% Friday, has gotten used to playing second fiddle to Home Depot; but last quarter's results showed Lowe's is becoming more competitive. Although Home Depot grew same-store sales at a 10.7% rate to Lowe's 9.6% in the second quarter, that was the slimmest difference in the metric in nearly three years. JP Morgan Chase's Chase Freedom Lifestyle Index showed earlier this year that home-improvement spending continues to rise across the board in the U.S., which should be reflected in Lowe's third-quarter report later this month.
Lastly, shares of beleaguered department store J.C. Penney (NYSE:JCP) surged 8.5% Friday, bringing the stock's weekly run-up to a remarkable 19.9%. The stock began to see new life earlier this week after CEO Myron Ullman expressed confidence in the business' ability to actually improve sales in the fourth quarter, a shockingly bullish projection that J.C. Penney investors haven't been used to seeing in years. Today, a Wall Street firm lent additional credence to that view, as ITG Investment Research lifted its sales forecast for the third quarter.