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.
The Dow Jones Industrial Average (^DJI 0.59%)was up 137 points, to 15,578, at 1:30 p.m. EST after some positive reports on the economy and better than expected earnings from Disney (DIS 0.09%). The S&P 500 (^GSPC 0.38%) was up 16 points to 1,767.
Disney shares jumped 4.5% to $75 in early afternoon trading. The company reported quarterly earnings after market close yesterday that easily beat analyst expectations on the strength of the animated movie Frozen, which has grossed nearly $900 million worldwide. Earnings per share rose 33% to $1.03, better than analyst expectations of $0.92. Revenue was up 8.5% to $12.31 billion, better than analyst expectations of $12.25 billion. Frozen was just released yesterday in China and will be released next month in Japan, which means next quarter should be strong as well.
Disney has been pursuing a strategy of building franchises around movies. As part of this strategy it has acquired Marvel Entertainment and Pixar, which continue to pay off in both organizational talent and a stable of well-liked characters and stories. The other strong point was Disney's cable channels, where net income grew 34% to $1.28 billion, led by ESPN. ABC was a weak point, however, with a 32% drop in net income to $178 million.
While Disney's stock jump is on top for the day, 25 of 30 Dow stocks are in the green on good news from three U.S. economic releases.
Report |
Period |
Result |
Previous |
---|---|---|---|
Weekly new unemployment claims |
1/25-2/22 |
331,000 |
351,000 |
Trade deficit |
December |
38.7 billion |
34.6 billion |
Productivity |
Q4 2013 |
3.2% |
3% |
The latter reports indicate together that while fourth-quarter GDP may be revised lower to roughly 3% growth from 3.2%, it does not appear we will see a drastic reduction that some feared.
Many are highlighting the new unemployment claims report, which came in at 331,000, better than expectations of 337,000. The four-week moving average was 334,000, just 250 below last week's level.
The basic story behind the jobs and unemployment numbers remains the same: the economy continues to add roughly 200,000 jobs a month and new unemployment claims are slowly trending lower. We have to wait till tomorrow for January's nonfarm payrolls report from the government, but I don't expect there to be a meaningful surprise in either direction there.
What's an investor to do?
In any event, your investment strategy shouldn't be dependent on a few economic reports. Constantly educate yourself, find great companies, and invest for the long term.