Disney Can't Drag the Dow Down; American Airlines Elevates Before Earnings

Potbelly shares also advance on Tuesday, despite a market that finished mostly in the red.

John Divine
John Divine
Jul 15, 2014 at 6:23PM

Federal Reserve Chairwoman Janet Yellen spoke before Congress today, and her comments successfully sent hopelessly mixed signals to Wall Street. While stressing that the U.S. economic recovery is far from over and suggesting that interest rates will remain low for some time, she also took a shot at stock market valuations. The report she submitted with her testimony today called valuations of social media and biotechnology stocks "substantially stretched." Satisfied with Ms. Yellen's unwillingness to raise rates any time soon, the Dow Jones Industrial Average (DJINDICES:^DJI) added 5 points, or less than 0.1%, to end at 17,060.

Walt Disney (NYSE:DIS) finished as one of the Dow's most severe decliners on Tuesday, although that only amounted to a 0.7% loss. Investors aren't pleased with the terms the NBA is seeking from Disney to retain future broadcasting rights for the basketball league's nationally televised games. Disney has two more years left on an eight-year agreement that gives its subsidiary channels ESPN and ABC broadcasting rights. The company currently dishes out $485 million annually for those rights, which include ABC's exclusive rights to air the NBA Finals. Negotiations for the next multi-year broadcasting contracts are under way, and not only is Time Warner vying for a part of the NBA Finals coverage, the NBA is seeking twice the annual fees currently paid by Disney.

Shares of sandwich-maker Potbelly (NASDAQ:PBPB) added a healthy 2.1% today. If there's one thing investors have learned about Potbelly stock since it IPO'd last October, it's that these shares are extremely volatile. The stock went public at $14 a share, hit $30 levels before its debut day was over, and closed today at $11.51. A penchant for under-delivering has driven Potbelly below its IPO price, as same-store sales fell in the first quarter and are expected to fall again in the second quarter. While shares have earned a spot as one of The 3 Worst Performing Restaurant Stocks of 2014, investors keep their eyes to the future, not the past, and my colleague Tamara Rutter makes a compelling bullish case for the sandwich-maker in her piece 3 Reasons Not to Worry About Potbelly.

Image Source: American Airlines

Finally, shares of American Airlines (NASDAQ:AAL) also ignored the broader market's negativity, gaining 1.7% as Wall Street analysts made a bullish case of their own for the stock. Cowen Group expects American Airlines to beat consensus earnings estimates when it reveals its quarterly financials in the upcoming days. A bullish article run by Barron's yesterday also helped aid the stock's ascent, as the famed publication cited American and Delta's increasing revenues and margins as best-in-class for investors.