Please ensure Javascript is enabled for purposes of website accessibility

More Weak Housing Data Can't Hold Back Dow

By Matt Thalman - Feb 21, 2014 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Procter & Gamble and Under Armour move higher while Groupon bombs.

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.

In a week full of downbeat news on the housing industry, investors got one final round of figures to end the week on a pessimistic note. The National Association of Realtors released data this morning showing that existing home sales in January dropped 5.1% to a seasonally adjusted annual rate of 4.62 million. That rate is the slowest pace of growth we have seen since July 2012. While sales have been sliding since the end of the summer, most have blamed that on higher interest rates and increasing housing prices. But, with weak homebuilder sentiment down and now two reports indicating that the housing market is cooling off, investors should certainly be keeping close watch on the sector.  

Despite the weak housing numbers, as of 1 p.m. EST the Dow Jones Industrial Average (^DJI 0.00%) was up 20 points, or 0.13%, the S&P 500 was higher by 0.18%, and the Nasdaq had risen 0.19%.

Within the Dow, shares of Procter & Gamble (PG -0.46%) were up nearly 0.6% at this time. The move comes after yesterday's P&G investors day in which CEO A.G. Lafley explained the company's strategy to a room of more than 600 analysts and investors. Two years ago, then-CEO Bob McDonald shocked the audience at the same event when he announced a plan to cut 5,700 jobs as part of a $10 billion restructuring plan. Lafley made no similarly shocking announcements, instead passing on a lot of good news, including that the company is not looking to make any large acquisitions. Today's move higher is likely a vote of confidence about what Lafley is attempting to do with the company.  

Outside the Dow, shares of Under Armour (UAA -2.83%) are up more than 5.5%. The increase comes after Under Armour and the U.S. Speedskating team confirmed an eight-year extension of their initial partnership through 2022. The current contract was set to expire this year and with all the controversy surrounding the Mach 39 suit, this deal should be seen as a big win for the company and perhaps a not so up-front way of saying that the U.S. team didn't perform so poorly because of the suit.  

One big loser outside the Dow today is Groupon (GRPN -10.37%), as shares are now down nearly 20%. The drop comes after management announced last night that it expects earnings per share for the first quarter to fall within a range of a loss of $0.02-$0.04, while analysts were expecting a gain of $0.06 per share. Furthermore, RBC Capital downgraded the stock from sector perform to underperform while dropping the price target from $11 to $7. RBC said the company was unlikely to survive long term in the current environment with all the competition knocking on Groupon's door, and even if it could weather the storm and turn itself around, the risk may not be worth the reward. Rather harsh words any way you look at it, but I would have to agree with the analyst.  

Looking for the next BIG thing? Look no further


Matt Thalman owns shares of Procter & Gamble and Under Armour. The Motley Fool recommends Procter & Gamble and Under Armour. The Motley Fool owns shares of Under Armour. Try any of our Foolish newsletter services free for 30 days. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,152.01 (0.00%) $0.00
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
$149.24 (-0.46%) $0.69
Groupon, Inc. Stock Quote
Groupon, Inc.
$12.01 (-10.37%) $-1.39
Under Armour, Inc. Stock Quote
Under Armour, Inc.
$9.95 (-2.83%) $0.29

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.