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.
Thomson Reuters/University of Michigan consumer sentiment figures released this morning suggest that while confidence increased through the month, it was still lower than seen in December. Considering we have a consumer-driven economy, that kind of news does not bode well with investors, and the major indexes have all moved lower today. As of 1 p.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) is down 112 points, or 0.71%, the S&P 500 is down 0.42% and the Nasdaq is off by 0.28%.
Despite warning of lower profits expectations in the fourth quarter, shares of Wal-Mart (NYSE:WMT) are up 0.24%. The stock is one of a handful of Dow components in the black today. Wal-Mart is claiming that cuts to food stamps and a tougher than usual winter played roles in the company's weaker than expected results. Profits will likely come in within a range of $1.60-$1.70 per share, according to the company's guidance. The quarter ends today and Wal-Mart is scheduled to report earnings on Feb. 20. Additionally, management expects to incur severance-related costs as the megaretailer's Sam's Club chain laid off 2,300 employees last week.
Outside the Dow, shares of credit card company MasterCard (NYSE:MA) are down 5%. The company's earnings report this morning showed a 3% increase to its fourth-quarter profit, helped by as increased transaction volume. Revenue came in at $2.13 billion, while analysts were looking for $2.14 billion. Earnings hit $0.57 per share, but Wall Street was looking for $0.60. The company experienced a 13% increase in transactions, but with expenses climbing 21%, profits didn't experience as much growth as they could have. Analysts and investors didn't like seeing expenses climb that high, and while some of it was due to litigation costs that will go away, it doesn't appear that the whole increase will disappear anytime soon. That means later earnings may be hurt by the new high expenses the company is facing.
Another big loser today is toy maker Mattel (NASDAQ:MAT), as shares have fallen 11%. The company reported earnings this morning and missed on both the top and bottom lines. Revenue came in at $2.11 billion and earnings per share hit $1.07, but analysts were looking for sales of $2.37 billion and EPS of $1.20. Revenue fell 6.3% from a year earlier; management explained the U.S. market was weaker than expected in the fourth quarter. The company's Barbie and Fisher-Price brands both saw sales decline 13%, while Hot Wheels slid 8%. Investors should remember this is one quarter, and while the argument can be made that technologically advanced toys (i.e., tablets, and PlayStations) are drawing more attention from kids, Mattel's brands are still very strong.
There is no denying it, technological innovation is the future