Investors seemed to get what they had hoped for in Fed Chair Janet Yellen's remarks to the Senate Banking Committee this morning as stocks returned to their winning ways. The Dow Jones Industrial Average (^DJI 0.45%) gained 74 points or 0.5%, while the S&P 500 also moved up 0.5%, hitting a new record high at 1,854.
Yellen told the Senate panel this morning that she was sympathetic to the market's belief that recent poor economic data has been caused by bad winter weather, saying: "It's really quite a range of data that has been soft recently. I think it's clear that ... unseasonably cold weather has played some role in much of that." She added that the Fed would continue monitoring the situation. She also said that it would take a "significant change" for the Fed to alter the course of stimulus taper it began in December, cutting the program by $10 billion each meeting.
The lackluster economic reports continued today as initial unemployment claims rose from 334,000 to 348,000 last week, worse than estimates of 335,000. January durable goods orders also fell 1%, but rose 1.1% when the volatile transportation sector is removed, perhaps indicating that consumer and business purchasing is picking up following a decline in December.
Retail stocks were front-and-center for the third day in a row as a host of earnings reports came in. Best Buy (BBY -1.41%) started the day off strong after its earnings release this morning, up nearly 10% at one point, but fell sharply in the afternoon, finishing down 1%. The electronics retailer cruised past earnings estimates with an EPS of $1.24 against expectations of $1.01, but that was still down from a profit of $1.47 a year ago. Meanwhile, revenues missed the mark at $14.68 billion, falling 3% to $14.47 billion. Same-store sales dropped 1.2%. Management cited "declining retail traffic, intense promotion, fewer holiday shopping days, and severe weather" for the slide in sales, reciting a refrain that many other retailers have this season. Best Buy also projected that total revenue and same-store sales would remain slightly negative for the first half of the year. The cause of the stock price's swing is hard to pinpoint, but these numbers and guidance-declines across the board-aren't particularly strong, especially for a company that already seems to have its back against the wall.
Elsewhere, Sears Holdings (SHLDQ) jumped 6% after reporting a narrower loss than expected. The struggling retailer posted an adjusted per-share loss of -$0.96 , better than estimates at -$1.82, while sales tumbled $13.6% to $10.59 billion, in line with estimates at $10.57 billion. Companywide same-store sales fell 6.4% in the quarter as CEO Eddie Lambert called it a "tough to terrible" quarter. Still, in a positive sign, Sears saw positive comps in February. While that may be some good news, this still seems like a broken company, unlikely to see a profit anytime soon especially with double-digit sales declines. I'd stay away.