Why the Dow Couldn't Hold 16,000

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.

It was almost a banner day for the stock market as both the Dow Jones Industrial Average and the S&P 500 hit milestones of 16,000 and 1,800 for the first time during intraday trading, but faded toward the end of the session. The blue chips up finished up slightly with a gain of 14 points, or 0.1%, while the S&P fell 0.4%.

What cooled off markets was none other than a statement from billionaire investor Carl Icahn. At an investment conference this afternoon, Icahn, who's made a killing this year on Netflix's boom and has also pressured Apple into increasing its share buyback, said: "I'm very cautious on equities today. This market could easily have a big drop." Icahn went on to argue that valuations are high and earnings growth has been driven by low borrowing costs and share buybacks rather than new opportunities and sales increases.

With the broad market up 25% this year thus far, Icahn may have a point. Corporate profits have been boosted by cost-cutting, and a low-interest-rate environment because of the Federal Reserve's stimulus program have made stocks unusually attractive compared with bonds. The S&P's P/E ratio has now reached 19, its highest level since the financial crisis, and well above its long-term average of 15. Profit growth has not been nearly strong as the market might indicate, as S&P 500 earnings are on track to grow just 3.6% this quarter from a year ago.

Turning to individual stocks, Tyson Foods finished up 2.3% after the food processor reported a strong fourth quarter. Tyson said higher chicken sales and a recovery in its beef business helped guide adjusted net income up 23% to $0.70, beating estimates by a penny. Sales of $8.89 billion met expectations. The company reached or surpassed many of its own full-year goals as sales in all categories grew, and management looked forward to a bright 2014. It said it expects domestic meat production to grow by 1% in the current fiscal year and saw input costs falling because of increased grain supplies. Its sales forecast at $36 billion topped the consensus at $35.7 billion, and Tyson lifted its quarterly dividend payout from $0.05 to $0.075, giving it a 1% yield.

Finally, Home Depot will report earnings tomorrow morning, and shares fell 0.5% ahead of the report today. The home-improvement giant is seen as a bellwether for the housing sector, and its report should help shed light on the sector's recent performance, as mortgage rates moved higher in the third quarter. So far, this earnings season has been mostly kind to homebuilders, but Home Depot shares have cooled off after a strong start to the year. Analysts are expecting earnings per share of $0.89 on $19.17 billion in sales when the retailer reports tomorrow.