Dow Jumps on Lower Oil Imports, but Retailers Suffer

Dow Jumps on Lower Oil Imports, but Retailers Suffer

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 got a shot of adrenaline today as the S&P 500 scored its first win in 2014, and the Dow Jones Industrial Average finished up 106 points, or 0.6% on excitement about Janet Yellen's confirmation last night as the first chairwoman of the Federal Reserve. Yellen is seen as ultra-dovish on monetary policy and is widely expected to continue current Chairman Ben Bernanke's quantitative easing program until the unemployment rate falls under 6.5%. The program has been particularly popular with Wall Street and is a major reason stocks soared nearly 30% last year. In other encouraging news for investors, the trade deficit hit a four-year low in November at $34.3 billion, down from $39.3 billion the month before. The principal causes for the improvement were exports hitting a record high and a decline in oil imports as the country continues to move toward energy independence. Imports of petroleum goods fell 11% in November to $28.5 billion on a drop in price and volume, and the trade deficit in oil reached its lowest point since 1996.

It wasn't all good news, however. Retailers saw the first hints of what could be a long period of reckoning with a lackluster holiday shopping season, the most important time of the year for the consumer-facing sector. comScore, a market research firm, reported this morning that online shopping in November and December rose 10% to $46.5 billion. While that may seem like a solid improvement from a year ago, the research company had projected a 14% increase in the category. A shorter holiday shopping season seemed to put pressure on growth, as did a particularly competitive pricing environment among retailers.

hhgregg seemed to be the first victim of the highly promotional holiday sales, as the retailer's stock fell 11% today after a 5% drop yesterday, when it reported dismal preliminary results for its quarter ended Dec. 31. The big-box chain said it estimated that same-store sales fell 11% in the quarter and said revenue totaled just $707 million, well below the $752 million analysts expected. CEO Dennis May blamed the poor performance on deep discounting by competitors, a strategy that the company chose not to follow. hhgregg's report weighed on others in the sector also, as Best Buy shares dropped 2.6%, following a similar slide yesterday. We'll learn more about how retailers fared during the holiday season, when the Commerce Department reports industry sales next Tuesday, and individual companies begin reporting earnings toward the end of the month.

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