Hot Stock Minute

Dow Sets New Record High; JCPenney Plummets

Stocks picked up steam this afternoon fueling the Dow Jones Industrial Average to a record intraday high of 14,716.46. The Dow also closed at a record high of 14,673. The S&P 500 closed at 1,569, just shy of its closing high of 1570.25 set last week. The gains were largely overshadowed by a possible insider trading scandal at KPMG and the revolving CEO door at JC Penney.

Shares of both Herbalife (HLF) and Skechers (SKX) were halted for some of the trading day due to the KPMG scandal. A senior partner at KPMG is accused of passing along information on companies who used KPMG for audits. KPMG says it has resigned from two accounts. Herbalife confirms it is one of them. There is no reason to believe there have been accounting discrepancies. KPMG says it simply could not continue to represent the companies given the scandal. The senior partner implicated has been fired. The person has not been identified publicly, but KPMG says the employee was based in Los Angeles and worked directly on the accounts in question.

Shares of JC Penney (JCP) spent much of the day below the stock's lowest closing price in 12-years. Shares dropped more than 12% on the CEO swap announced late yesterday. Gone is Ron Johnson who was brought in from Apple 17-months ago. Back at the helm is his predecessor Myron Ullman. Johnson saw sales tank 25% over the past year as he tried a new pricing strategy in which the company lowered everyday prices but ran minimal discounts.

Coincidentally activist investor Bill Ackman is heavily involved with both Herbalife and JC Penney. Ackman, the founder of Pershing Square Capital, has been in a bitter public battle with Carl Icahn over the value of Herbalife; he has called the company a pyramid scheme and shorted the stock. Ackman was also responsible for Ron Johnson's hire at JC Penney.

Alcoa (AA) shares were flat in the wake of its earnings report which it released after the closing bell yesterday. The company beat the street reporting a 59% rise in net profit for the first quarter. But a look beyond the headline number shows those profits dropping to 15% when you exclude special items. Earnings excluding those items came to 11-cents a share, beating estimates of 8-cents. They also improve upon last year's number of 10-cents a share though sales were down 3% and missed estimates. Alcoa shares had climbed 1.8% yesterday ahead of the report.

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