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Rite Aid Rallies, Home Depot Slips As Investors Await Housing Data

By John Divine – Feb 18, 2014 at 6:06PM

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Ctrip.com International Ltd. jumps more than 11%; Dow trades flat as markets wait for data points

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 zigged and zagged their way to a mixed close on Tuesday as Wall Street resumed trading after a long Presidents' Day weekend. The Dow Jones Industrial Average (^DJI -1.03%) was more subdued than the other two major U.S. indices today, stumbling as 60% of its components fell. Tomorrow investors will look to January's housing starts and the minutes from last month's Federal Reserve policy meeting to guide their decisions. With a dearth of economic data to help steer the market on Tuesday, the Dow shed a modest 24 points, or 0.2%, to end at 16,130.

Although Wall Street wasn't overwhelmed with breaking economic developments today, the little news investors did get was disconcerting. The National Association of Home Builders' monthly sentiment index fell sharply and unexpectedly from 56 in January to 46 in February, the largest single-month drop since the inception of the measurement in 2006. Home Depot (HD -0.82%) shareholders -- as you might expect -- weren't thrilled, but also managed to contain their fears, sending the stock down just 0.5%. If I owned Home Depot stock I'd be less concerned with abstractions like sentiment than more concrete data like monthly housing starts, which, conveniently enough, will be revealed tomorrow.

Online travel booking site Ctrip.com International (TCOM 1.25%) soared 11.5% on Tuesday, as the long weekend gave investors time to think about Ctrip's blowout quarter last week. Shares of the Chinese travel portal jumped 10% last Thursday alone after the company crushed Wall Street earnings estimates, and after retreating on Friday, the bulls were out again in full force today. Ctrip.com's results, when compared to rivals in other emerging markets like India, look promising. That said, only invest in Chinese Internet companies if you have a tolerance for risk and volatility, because that's something you'll surely get in spades. 

Of course, volatility in itself isn't a bad thing if you're comfortable with letting your bet ride for a few years. Rite Aid (RAD -4.46%) stock, which rallied 5.9% today, is a prime example. Shares are about 70% more volatile than the stock market as a whole, but they've surged fourfold in the last year alone; on a longer time scale, for every $1 you invested five years ago, you'd have $26 today. Tuesday the drugstore announced a renewed partnership with longtime distributor McKesson through 2019, in an agreement that investors clearly believe will create synergies in Rite Aid's supply chain.

John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Ctrip.com International, Home Depot, and McKesson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,596.34 (-1.03%) $-350.76
Home Depot Stock Quote
Home Depot
HD
$317.45 (-0.82%) $-2.63
Rite Aid Stock Quote
Rite Aid
RAD
$4.71 (-4.46%) $0.22
Trip.com Stock Quote
Trip.com
TCOM
$33.11 (1.25%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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