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.
It was another middling day for stocks, as the Dow Jones Industrial Average (DJINDICES:^DJI) again broke 16,000 this morning but finished short of the big, round number, closing down 9 points, or 0.06%. A disappointing holiday forecast from Best Buy (NYSE:BBY) weighed on the market, while investors also reacted to a record $13 billion settlement between JPMorgan Chase (NYSE:JPM) and the Department of Justice, which puts to rest the bank's and its acquisition's legal malfeasance dating back to the financial crisis. JPMorgan shares are up about 5% in the last week in anticipation of the deal. At a speech tonight to the National Economists Club, Federal Reserve Chairman Ben Bernanke seemed to imply that the stimulus program would continue over the near term, saying: "The economy has made significant progress since the depths of the recession. However, we are still far from where we would like to be, and, consequently, it may be some time before monetary policy returns to more normal settings."
Best Buy shares finished down 11% despite beating earnings estimates, as the big-box retailer warned that a heavily promotional holiday retail environment would put pressure on its fourth-quarter margins. Even with the sell-off, Best Buy shares have tripled this year as new CEO Hubert Joly's "Renew Blue" turnaround strategy has taken hold. The initiative features cutting of up to $725 million in annual costs, partnering with vendors such as Samsung to open store-in-store kiosks, and retraining employees to provide better service. The strategy seems to ne paying off as domestic same-store sales improved 1.7%, even as overall revenue was flat, and adjusted per-share profits jumped from $0.04 a year ago to $0.18.
Campbell Soup (NYSE:CPB) was also cooling off the market, as its shares fell 6.2% after an unappetizing earnings report. The world's largest soup-maker badly missed estimates, reporting earnings per share of $0.63 against expectations of $0.86, while revenues fell 1.8% to $2.17 billion, missing the analysts' mark at $2.3 billion. Guidance was also below estimates. Campbell blamed a late Thanksgiving, marketing expenses, and a change in retailer buying patterns for the earnings shortfall, but broader food shopping patterns may also be at play, as fresh produce and organic packaged goods have gained favor with the population amid the rise of Whole Foods Market and other natural-foods grocers.
Finally, Home Depot (NYSE:HD) managed to score a win for retailers, gaining 0.9% after a solid earnings report this morning. Sales at the home-improvement retailer improved 7.4% to $19.5 billion, topping estimates of $19.17 billion, as same-store sales jumped 7.4%, indicating the housing market continues to heat up. That sales improvement was good for a 28.4% increase in adjusted earnings per share to $0.95, cruising past the analyst mark at $0.89. Home Depot also lifted its full-year EPS guidance to $3.72, slightly ahead of the consensus. The results bode well for fellow home-improvement retailer, Lowe's, which reports earnings tomorrow morning.