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 (INDEX: ^DJI) 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 2.46%). The S&P 500 (^GSPC 1.67%) 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.
US Initial Claims for Unemployment Insurance data by YCharts.
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.
