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.
Stock market investors ended the challenging month of January on a down note, as the market's attempt to claw back early losses was only partially successful. Even though the drop in major market benchmarks was relatively modest by the close, Amazon.com (AMZN -1.40%), Mattel (MAT -0.87%), and Newmont Mining (NEM -1.53%) all posted double-digit percentage losses Friday.
Amazon fell by 11% after the online retailer's earnings results weren't impressive enough to satisfy growth-hungry investors. Amazon posted revenue growth of 20%, with earnings per share that more than doubled from year-ago levels. Yet, investors had expected to see even faster growth in both sales and net income, and even news that the company might raise the price on its popular Amazon Prime two-day shipping and streaming-video service didn't give shareholders much optimism about 2014. Still, the long-term argument for Amazon remains intact, with its Kindle ecosystem beginning to reap network rewards that could help drive future growth.
Mattel dropped 12%, as the toymaker reported a surprisingly difficult holiday quarter. Overall sales dropped 6% worldwide, with the company's core North American segment responsible for all of those losses. Two of the company's best-known brands, Barbie and Fisher-Price, saw even more dramatic sales declines of 13% each. The toymaker did a good job of reining in costs in order to minimize the hit to adjusted earnings, but even though CEO Bryan Stockton tried to emphasize the positives of the full 2013 year, investors were shocked by the implications of the quarter on Mattel's long-term prospects.
Newmont Mining declined 10% after its guidance for 2014 raised questions about the gold miner's profit margins. The company said that it expects to produce between 5 million and 5.3 million equivalent ounces of gold, but cash costs of between $740 and $790 per ounce were above what many investors had expected to see. With plans to cut capital expenditures by a greater amount than expected, Newmont looks vulnerable to any further declines in gold prices.