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.
Despite a disappointing housing report and a weak business activity index reading from the Dallas Federal Reserve, the major indexes are all moving higher this afternoon. As of 1:05 p.m. EST the Dow Jones Industrial Average (^DJI -0.98%) is up 23 points, or 0.14%, while the S&P 500 has risen 0.04% and the Nasdaq is higher by 0.16%.
Economists had expected October's pending home sales to rise 1.3%, but the actual number came in at a 0.6% loss. Similarly, they had looked for a 5 reading on business activity, but the reported number this morning was just 1.9. While it would appear at this time that neither reading is hurting the markets or sending investors' confidence lower, these are not good signs for the overall health of the economy.
Still, the major indexes and a few individual stocks are moving higher based on company-specific news. Shares of Wal-Mart (WMT 0.57%) are higher by 0.5% after it was announced that CEO Mike Duke would retire in 2014. The company has already decided to promote Doug McMillon to the C suite. McMillon is CEO of Wal-Mart International and has held other key roles at Wal-Mart and Sam's Club. The change comes as Wal-Mart has struggled with growth and had some bad publicity around the world as allegations of bribery arose. A new CEO and a fresh start should help the world's largest retailer.
Despite the announcement that J.C. Penney (JCPN.Q) is being removed from the S&P 500, the chain's shares are higher by 3.5% today. While the move out of the index of which it was a founding member in 1957 does not materially hurt the company or its balance sheet, it may hurt the stock price. Since index funds and different institutional investors must trade based on the guidelines governing their fund, if they can only hold S&P 500 stocks they must now sell any shares of J.C. Penney. In most cases these are not sales that must occur the day the change happens, but they need to be made within the quarter; thus, we could see some selling pressure put on the stock before the end of the year.
Lastly, shares of Macy's (M -2.03%) are higher by 1.91% today. The move comes after other retailers struggled during the third quarter, and many believe this will be a very weak holiday shopping season. But today's rise may indicate investors feel Macy's will prevail this year and continue to lead the retail pack. Despite what you may feel about Macy's, or any of the other brick and mortar stores, Amazon.com may be the true retail winner, and not just during this holiday shopping season.
