Market Wrap-Up for Aug. 13 (FLO, YUM, LLY, AAPL, more)
Despite edging higher at the open, stocks fell into negative territory in early morning trading today. However, investors and traders eventually turned that initial bearish sentiment into a bit of bullishness, causing the major indices to rally into positive ground by the close.
We are past the heart of earnings seasons, with few companies continuing to release their quarterly financial results. Flowers Foods (FLO) was the biggest company to release earnings today, beating expectations on strong profit and sales. However, the stock closed in negative territory.
Seeing positive action today were shares of Eli Lilly (LLY), after the company completed its phase III testing of a new lung cancer drug. Also, Apple (AAPL) shares got a boost from a bullish report at ISI Group, plus the revelation that Carl Icahn has amassed a large stake in the tech giant.
Furthermore, Wall Street analysts’ upgrades of Hewlett-Packard (HPQ), Xerox (XRX), and Marvell Technologies (MRVL) helped those stocks rally in today’s trading. In contrast, downgrades of Nordstrom (JWN), Microsoft (MSFT), and Compass Minerals (CMP) dragged their shares lower.
Moving away from stocks and onto the bond market front, the yield of the 10 Year US Treasury note saw a lot of action today, with the yield of the T-Note rising 10 basis points to 2.72% by the close.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.
The Little Guy Shouldn’t Always Follow the Big Guy’s Lead
The most talked about story on Wall Street this morning has been activist investor Bill Ackman’s resignation from the Board of Directors of JC Penney (JCP). After about a week of publicly trying to get his way to replace the current CEO and appoint new Board members, Mr. Ackman finally stepped down from his position on the Board. Nonetheless, Mr. Ackman, through his Perishing Square Capital Management hedge fund, still owns an 18% stake in JC Penney, and the stock continues to plummet.
Mr. Ackman has been making headlines a lot in recent weeks: not only has the JC Penney ordeal been widely covered, he has been in a public battle with Carl Icahn, and more recently George Soros, over Herablife (HLF), and he recently announced a major position in Air Products & Chemical (APD). The well-known hedge fund manger seems to be desperately making moves to save face as his big holdings have not performed well, to say the least.
Letting emotions get the better of you is the Achilles Heel of any good investors. Though I do not know what is going through Mr. Ackman’s head at the moment, to me it seems that he is letting his emotions and pride get the best of him in his very public and very ugly JCP and HLF battles. Retail investors should use Mr. Ackman’s recent battles as a good learning lesson when it comes to our investing decisions. Though us individual investors usually do not have as much skin in the game as Mr. Ackman does, it still is a good example that we should not behave like he has been. Sometimes investors need to cut losses early, rather than desperately try and hope that the investments will reverse course and turn into gains. We cannot keep drawing and re-drawing lines in the sand when it comes to our investments’ performances; otherwise, your 25% loss will turn into a 100% loss before you know it.
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