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Despite a Strong Day by Walt Disney and Nike, Dow Can't Find Green

By Matt Thalman – Feb 21, 2014 at 9:03PM

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Major indexes fall after weak housing data released by the National Association of Realtors.

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.

Despite popping higher this morning and in the early afternoon, the major indexes finished today's session in the red. The Dow Jones Industrial Average (^DJI -0.46%) lost 29 points, or 0.19%, while the S&P 500 also declined 0.19% and the Nasdaq fell 0.1%. The moves lower came after the National Association of Realtors released data indicating that existing home sales in January had declined by 5.1% to the lowest seasonally adjusted rate since July 2012, to 4.62 million homes. This does not bode well for the economy at this time, and it increases the likelihood of confusion and mass speculation about what the Federal Reserve will do at its next open committee meeting. This likely increases market volatility.

But even though the Dow, as a whole, moved lower today, a few big winners could still be found -- Walt Disney (DIS -0.23%), for example, rose higher by 1.19%. Recently, we have seen a number of issues within the television industry, as contract problems with the content providers and the service operators had millions of Time Warner customers missing channels. Then, the Comcast-Time Warner acquisition. On top of that, investors and analysts keep worrying about the possible mass cord cutting we are about to see in the future. The whole time though, Disney, the one company that makes more in TV distribution fees than anyone else in the world, is still stable and not showing any concern. The company has signed deals with all the major service providers, and has even inked a very lucrative deal with Netflix, which will help the company stay connected to customers, even if they cut the cord. I have mentioned in the past that Disney has built a nearly bullet-proof business; its TV studio is a big part of that.

Another big Dow winner today was Nike (NKE 0.11%), as shares also rose 1.19%. The move comes while competitor Under Armour (UAA -0.10%) is having a great day on Wall Street, with shares higher by 5.12%. Under Armour inked a deal this morning that will make it the official sponsor of the U.S. speed-skating team for another eight years. While investors cheer the Under Armour deal, the whole thing just points to the strength that Nike has over the industry, and the massive head start it has over the other players. Last year, Nike posted revenue of $26.3 billion, but Under Armour sold less than 10% that amount during the year. While the younger company does pose a threat to Nike over the long run, at this time, the company and its investors shouldn't be too concerned, because Under Armour still doesn't really operate outside the U.S. on any meaningful level.

Another big winner today was Rite Aid (RAD 0.68%), which closed the day higher by 2.14%, after trading higher by more than 5.2% earlier in the day. The move comes with little news pertaining to the company, but on trading volume which was almost twice that of the average day's 27 million shares, when more than 50 million changed hands this afternoon. The company is in the midst of a turnaround, and the share price has increased more than 324% during the past 52 weeks, while the S&P 500 was up a measly 23% during the same time frame. But even after that massive move higher, the stock is still only trading at 22 times past earnings. If the company can continue to perform well, the stock will continue climbing higher, and current shareholders should continue to hang on for the ride.

Matt Thalman owns shares of Under Armour and Walt Disney. The Motley Fool recommends Nike, Under Armour, and Walt Disney. The Motley Fool owns shares of Nike, Under Armour, and Walt Disney. We Fools may not 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,696.37 (-0.46%) $-156.16
Walt Disney Stock Quote
Walt Disney
$94.47 (-0.23%) $0.22
Rite Aid Stock Quote
Rite Aid
$5.20 (0.68%) $0.04
Nike Stock Quote
$106.37 (0.11%) $0.12
Under Armour (A Shares) Stock Quote
Under Armour (A Shares)
$9.83 (-0.10%) $0.01

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

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