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 -- as they are prone to do -- zigged and zagged their way through the trading session on Tuesday, eventually deciding on slim losses as real estate prices and consumer confidence numbers did more to confuse than inform. The S&P/Case-Shiller home price index, which measures prices of existing single-family residential homes in 20 U.S. cities, ticked up 0.8% in December from November. From December 2012, however, home prices were up 13.4%, as low interest rates facilitated a booming year for real estate. The Dow Jones Industrial Average (DJINDICES:^DJI) lost 27 points, or less than 0.2%, to end at 16,179.
Sure, Home Depot (NYSE:HD) shareholders love to hear about a booming housing market, but the stock's Dow-topping 4% jump today wasn't driven by rising home prices. It wasn't even driven by Home Depot's quarterly results, which were hot off the presses on Tuesday. In fact, Home Depot actually missed sales expectations in the fourth quarter – it was the company's guidance that caught Wall Street's eyes. While the brutal winter weather dinged the retailer's revenue, the company sees itself well positioned for spring, as people flock to Home Depot for belated repairs.
Shares of troubled department store chain J.C. Penney (NYSE:JCP) showed no signs of trouble Tuesday, as shares rallied 7.7%. Swings like these, however, are precisely why day-to-day stock swings can't be viewed as gauges of a company's health. Wall Street still lacks confidence in J.C. Penney's liquidity, especially after the company's decision to close 33 stores and lay off 2,000 employees in mid-January. Still, investors are holding their breath, crossing their fingers, and rubbing their lucky rabbits' feet for J.C. Penney's quarterly earnings report tomorrow afternoon, which will tell us once and for all how the business capitalized on the holiday season.
Hong Kong-based Melco Crown Entertainment Limited (NASDAQ:MLCO), a gaming and resort operator with casinos in the gambling capital of the world, Macau, announced a new, unique dividend policy that will change the way shareholders participate in the company's success. The board of directors of Melco Crown Entertainment, which previously paid no dividend, recommended that a special quarterly dividend be issued from now on, returning roughly 30% of the casino's net yearly earnings to shareholders directly. This means the dividend will fluctuate with the company's earnings from year to year, and those profits will no longer be reinvested in the company itself. The first quarterly payment, scheduled for April 16, will be to the tune of $0.1147 per share, which, when annualized and computed at today's closing price, represents a 1.1% annual dividend.
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