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Dow's Telecoms Are Mixed While J.C. Penney Shorts Run

By Matt Thalman – Feb 27, 2014 at 1:00PM

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Markets go higher after mediocre jobs report.

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 Labor Department reported today that the number of Americans filing for new unemployment benefits rose by 14,000 last week to hit a seasonally adjusted 348,000. The good news is that the four-week moving average didn't change from 338,250 and that we are not far above pre-recession levels. With that data and as of 1:07  p.m. EST, the Dow Jones Industrial Average (^DJI) is up 41 points, or 0.25%, the S&P 500 is higher by 0.25% and on the verge of setting a new all-time high, and the Nasdaq is up 0.38%.  

Shares of Dow component Verizon (VZ 0.26%) are climbing higher by 2.7%. The move comes with little company news, but continued speculation that the TV and Internet service provider will soon cut its own deal with Netflix, similar to the one the streaming video service recently cut with Comcast. Since Netflix now accounts for nearly one-third all Internet traffic at peak hours, service providers want to be paid more to ensure the video streams at good speeds. The company paid up by an undisclosed amount to Comcast. Any money agreed to in a similar deal with Verizon would likely essentially go straight to the bottom line.

The Dow's other telecom company AT&T (T 1.01%), is up only 0.14% today as a number of high-profile investors and market participants suggest that the long talked about merger between wireless carriers T-Mobile and Sprint may actually happen. This would pose a serious threat to AT&T and Verizon. The competition in this industry has been heating up for a few months, but it this deal goes through things will get really hot.

Shares of J.C. Penney (JCPN.Q) were up more than 24.5% after the retailer posted fourth-quarter earnings yesterday after the closing bell. The department store chain posted revenue of $3.78 billion and an earnings per share loss of $0.68 Analysts were looking for $3.85 billion and an earnings loss of per share of $0.88. These results point to the idea that the company might have hit rock bottom, a theme CEO Myron Ullman cited after the earnings release.If that is the case, it is fair for shares to be on the rise, but some of today's move upward is likely being driven by short-sellers closing their positions. As of the most recent data, 43% of J.C. Penney's shares had been sold short; buying all those back can really move a stock higher, as we are seeing today.  

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Matt Thalman has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. 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)
^DJI
$33,849.46 (%)
AT&T Stock Quote
AT&T
T
$19.01 (1.01%) $0.19
Verizon Communications Stock Quote
Verizon Communications
VZ
$38.34 (0.26%) $0.10
J.C. Penney Stock Quote
J.C. Penney
JCPN.Q

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

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