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 the U.S. government released data this morning indicating that gross domestic product growth in the third quarter hit 4.1%, investors continued the Dow Jones Industrial Average's (^DJI 1.05%) two-day Fed-induced rally and added another 42 points, or 0.26%, to the already 303 points the blue-chip index gained on Wednesday and Thursday after the central bank announced that it would begin to taper its $85 billion-a-month asset purchase program known as QE3.
The higher-than-expected GDP figure certainly played right into the Fed's hands as it stated on Wednesday that the economy was getting stronger, thus allowing it to begin to slowly wind down its asset purchase program. Had the GDP figure come in lower than the expected 3.6%, the markets would not have taken the news as well and many would certainly have been arguing the Fed made the decision too early. But so far things seem to be working out and the Dow even hit a new all-time intraday high at 16,287 today.
Looking outside the Dow, one company that had a good day was BlackBerry (BB 1.60%) as shares rose 15.52%. The move was likely caused by the announcement that BlackBerry and Foxconn, a Taiwanese company that operates a number of factories in China and is most notably known for making Apple's iPhone and iPad, have signed a five-year agreement in which Foxconn will make BlackBerry's devices. Furthermore, Foxconn will manage the inventory of the products that will help reduce BlackBerry's manufacturing costs.
Additionally, BlackBerry released third-quarter earnings today, which indicated that the company lost $4.4 billion during the quarter as revenue fell 56%. But CEO and Chairman John Chen told analysts on the conference call that he has set up a plan to get the company profitable by 2016. While this will certainly be a fun story to watch, investors shouldn't try to play this stock either long or short as it holds way too much risk no matter how you look at it.
Another big winner today was Red Hat, which this morning I noted why it was higher by 14.49%. To learn what caused that move click here.
Now let's switch our focus to a few big losers today, by starting with Best Buy (BBY 3.69%). Shares of the electronics retailer fell 4.09% today on very little news. But trading volume was nearly double the company's three-month average of 5.77 million shares as more than 10.06 million shares traded hands today. The increase volume is likely traders selling the position after a wonderful 2013, as the stock has risen 235% year to date. Toward the end of a year, traders and large intuitional shareholders take gains off the table and readjust their portfolios. Today's move was likely some of that since volume was so high and there was nearly zero news to speak of.
Another big loser was CarMax as shares fell 9.37% after the company reported mediocre earnings results but warned that lenders were beginning to tighten their belts. CarMax even stated that it will need to look for new subprime lenders in order to offer loans to some customers because typical sources are requiring higher-quality borrowers. This announcement from CarMax is likely one reason shares of AutoNation (AN 0.66%) fell by 2.41% today. If CarMax is having a difficult time getting customers approved for loans through the traditional streams, it's likely AutoNation is dealing with similar problems and investors likely are concerned that AutoNation's quarterly results will show some weakness when it reports next month.
