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.
Stocks jumped again today as strong economic reports and a budget agreement by the House of Representatives lifted the Dow Jones Industrial Average (DJINDICES:^DJI) more than 100 points for the second day in a row. The blue chips moved up 108 points, or 0.7%, and the S&P 500 hit a new record at 1,848, gaining 0.5% on the day. Investors were jazzed by a positive outlook this afternoon in the Fed's Beige Book report, its update that culls data from its 12 districts. The central bank said the economy expanded at a moderate pace in the past month and a half. What seemed to be particularly encouraging to investors was that eight of the 12 districts saw an increase in hiring, and a majority of districts believed the economy was heading in the right direction.
Investors also applauded a $1.1 trillion budget deal by the House that puts off any shenanigans like we saw last year, with the fiscal cliff and the government shutdown, until the end of September at the earliest. The House overwhelmingly passed the omnibus spending bill, by a vote of 359-67, which funds everything from missile systems to Amtrak, and raises spending on discretionary programs by $45 billion over levels mandated by the "sequester." The bill is widely expected to pass the Senate, which Democrats control, and become law.
Not all stocks were reporting good news today despite the market's rising tide. After hours, J.C. Penney (NYSE:JCP) said it will close 33 stores, resulting in 2,000 job cuts in an attempt to speed up its turnaround strategy. The stock barely moved on word of the closings, which are hardly a surprise given the massive losses that have piled up for the retailer since Ron Johnson's failed effort to revamp the aging brand. The company said the actions will save $65 million annually, starting this year, though the move will result in a one-time charge of $43 million. All assigned stores will be closed by early May. CEO Mike Ullman said, "This important step addresses a strategic priority to improve the profitability of our stores." For investors, the only question to ask about the store closings may be why they didn't happen sooner. Now trading at $7 a share, the stock needs all the help it can get.
Falling further was Nu Skin Enterprises (NYSE:NUS), which finished down 16% after the Chinese Communist Party's People's Daily newspaper released a scathing attack against the multilevel marketer of skin-care products, saying that it brainwashed trainees and was a "suspected illegal pyramid scheme." The charges carry a particular weight because the paper is the official publication of China's ruling party, the country where Nu Skin brought in half of its revenue in its most recent quarter, and China has much stricter rules on direct selling than the U.S. does. In its own defense, Nu Skin said it carries direct selling licenses in 19 of 32 countries and has always been in full compliance with the country's laws. Despite the stock's sharp drop, several analysts came to the company's defense, insisting that its practices were legitimate.