Sirius XM Holdings, Delta Air Lines Slump Ahead of Fed Statement
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.
Wall Street expressed its ecstatic anticipation over this week's Federal Open Market Committee meeting yesterday, bidding the Dow Jones Industrial Average nearly 130 points higher before the two-day convention. Today, the stock market did little more than yawn as the policy meeting finally got under way. The Fed can count on investors' full attention tomorrow -- no yawning allowed -- at 2:30 p.m. ET, when Chairman Ben Bernanke hosts a press conference explaining the central bank's new forecasts and potential policy adjustments. With Wall Street fixated on tomorrow's juicy docket, the Dow treaded water, losing 9 points, or less than 0.1%, to end at 15,875.
Just 10% of blue chips lost ground on Monday; today that number spiked to 70%, with McDonald's stock finishing as one of the most severe laggards, slumping 1.1%. Shares are hungry for a catalyst right now, especially after last week's November sales report, which showed an unexpected 0.8% decline in same-store sales in U.S. locations. This revelation is troubling for shareholders because U.S. McDonald's' biggest market, and either consumer tastes are shifting or competition is stepping its game up. A single month of lackluster domestic same-store sales doesn't spell doom by any means, but this metric will be an important one to monitor going forward.
One catalyst that could vault shares higher in 2014 is the fast-food chain's McCafe packaged coffees, set to hit grocers across the country next year.
One might use a service such as Delta Air Lines to travel to a country where McDonald's is growing in popularity, but in doing so, pattern-seeking investors might notice a correlation between this person and poor stock performance. Delta Air Lines stock, for instance, tumbled 3.5% Tuesday, a day after shares ended as some of the worst performers in the entire S&P 500. Today's slump was exacerbated by an incident at Wisconsin's Dane County airport, in which adverse weather conditions caused a Delta flight to slide off the runway while taxiing to the gate. No one was injured, and the incident won't impact Delta's business in any tangible way, so long-term investors should keep that in mind.
Lastly, Sirius XM Holdings stock dropped 2.8% today. The previous five days of trading have been rough for Sirius XM investors as shares fell more than 5% on increased competition from rivals (i.e. Spotify's free mobile app.) Sirius investors, especially the longer-term ones, should be very proud of themselves. The company went from annual losses of $5.3 billion in 2008 to a net income approaching $2.4 billion in fiscal 2012. That's quite a turnaround, and one that the stock market took notice of. A $1,000 investment in Sirius XM five years ago would be worth $26,269 today. Today's decline isn't predicated on any horrendous news, the stock is simply volatile and carries an above-average amount of risk with it. Shareholders hope that the company's $0.50 monthly boost in subscription prices will help its business continue to grow next year without losing subscribers.
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The article Sirius XM Holdings, Delta Air Lines Slump Ahead of Fed Statement originally appeared on Fool.com.
Fool contributor John Divine owns shares of Apple and Google.You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.The Motley Fool recommends Apple, Google, McDonald's, and Netflix and owns shares of Apple, Google, McDonald's, Netflix, and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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