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S&P 500 Snaps Losing Streak After Mixed Retail Earnings

Dan Berman
Hot Stock Minute

The S&P 500 broke its first four-day losing streak of 2013, although the Dow Industrials couldn't hold on, falling into the red in late trading. After several sessions of bruising losses, the market was propelled by a handful of retailers reporting earnings. There were no major economic reports to point to today. Tomorrow will bring existing homes sales, and more importantly, release of Fed minutes. Traders are actively looking for clues as to whether the central bank will begin to retreat from its bond-buying stimulus program next month.

J.C. Penney (JCP) earnings were horrendous, but not bad enough to keep the stock from popping. Shares rose roughly 6% on its report which showed losses of $2.16 a share, more than twice the already-awful expectations for a loss of $1.06 a share. Revenue was also below estimates at $2.66 billion dollars, almost $100 million under estimates. Sales at stores open at least a year fell nearly 12% during the quarter as J.C. Penney reverted to its old ways of running promotions. But CEO Myron Ullman called the back-to-school season encouraging. In addition, Bloomberg reports that hedge fund manager Kyle Bass has accumulated a long position in the company's stock.

Best Buy (BBY) soared over 13% after posting adjusted earnings of 32-cents a share when expectations were for 12-cents. Revenues also beat at $9.3 billion. Sales are in fact down drastically over last year largely because the chain closed dozens of underperforming stores. Meanwhile, remaining ones have been redesigned with Samsung and Microsoft sections. The company has also exited from its 50% stake in Best Buy Europe. Even before today's gains, Best Buy was the second best performer in the S&P 500 this year, up 160%.

Barnes & Noble (BKS) plummeted over 12% on a statement released along with its earnings. Company founder and chairman Leonard Riggio says he has suspended efforts to buy the retail business for the time being. As for the quarter just ended, B&N slightly beat estimates with adjusted losses of 86-cents a share versus expectations of an 89-cents loss. Revenue was also marginally better than consensus at $1.33 billion, but it was down 8% from a year ago. These have been tumultuous times for the chain, which just this weekend cut the price on one of its Nook tablets to $99. CEO William Lynch resigned last month, after the company announced a 34% sales drop in its Nook business. In June, Barnes & Noble said it would no longer make most Nook tablets unless it found a partner.

Urban Outfitters (URBN) climbed 8% after its earnings report yesterday after the closing bell. The clothing chain missed revenue projections with sales of $759 million versus estimates of $768 million. However, it beat on the bottom line, posting profits of 51-cents a share, 3-cents above estimates. The company says it was successful in its attempts to run fewer discounts during the period. Sales were particularly strong at Anthropology stores which have been revamped to offer more feminine and bohemian styles. Prior to the gains we've seen today, the stock has been down about 3-percent this year.

The TJX Companies (TJX), the parent of T.J. Maxx, rose nearly 7% on a positive quarter. Revenue at stores open at least a year climbed 4%. That helped the company earn 66-cents a share, up a dime from a year ago and beating estimates of 63-cents a share. Revenue rose 8% to $6.44 billion above estimates of $6.37 billion. TJX is one of the few department stores not to disappoint with its report. Macy's and Kohl's both reported lackluster periods last week.

Also a part of this morning's earnings blizzard was Home Depot (HD) At first the stock moved several points higher, but after a dip into the red, shares wound up hovering near the flatline, ending down 1% for the day. The chain beat on both the top and bottom, posting profits of $1.24 a share when expectations were for $1.21. That came on $22.5-billion dollars in sales ahead of estimates for $21.798-billion. Home Depot says it is in fact benefiting from a much-talked about rebound in the housing market. The company is raising its outlook for both same-store sales and yearly earnings. Prior to today, Home Depot stock is up about 18-percent year-to-date