Home Depot and Nike Gain as Dow Hits Another Record

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.

After taking a day-and-half break to celebrate Christmas, the Dow Jones Industrial Average brushed off any concerns about an eggnog hangover as it scored yet another win today, jumping 122 points, or 0.8%, to 16,479, hitting a record high once again. A better-than-expected initial unemployment claims report helped boost markets at the opening bell as new jobless reports totaled 338,000, lower than expectations of 350,000, and down from last week's elevated tally of 380,000. New claims data is notoriously erratic during the holiday shopping season, however, as retailers are fast hiring and unloading short-term employees in an effort to meet the temporary spike in demand. Investors also seemed to applaud a late boost in holiday sales as heavy discounting helped spur more Christmas gift buying than was expected. Retail sales for the holiday shopping season are estimated to have hit $602.1 billion, a new record, and about 50% higher than the total back in 2000. The figure was 2.3% above 2012's mark, better than 0.7% growth last year, and the greatest in three years.

Retail stocks got a bounce from the upbeat numbers. Home Depot moved up 1.1%, benefiting not just from the holiday sales report -- as soldering irons were surprisingly not this year's "it" gift -- but from a report Tuesday showing new home sales in November coming in at 464,000, better than expectations of 434,000. The Commerce Department also revised its October total up by 30,000, to 474,000, evidence that the housing recovery continues to carry on. While Home Depot is not a direct beneficiary of Christmas shopping the way most retailers are, it is particularly sensitive to consumer spending trends as the home-improvement market is perhaps the most valuable discretionary spending category in retail.

Nike moved up 0.7%, keeping pace with the Dow's gains, as the ubiquitous sports brand figures to be a big winner from the better-than-expected holiday sales. The Swoosh has already had a stellar year, posting strong profit gains as it continues to find new growth areas in North America thanks to innovative ideas such as the Fuel band, and the company's beaten earnings estimates in its last four quarters, and seen shares increase 50% this year in the process. With the World Cup taking place in Brazil next year, a huge country with a burgeoning middle class ready to grab on to the kind of conspicuous consumption Nike represents, 2014 could be another stellar year for the sneaker maker. A recently announced goal of growing revenue to $36 billion by 2016 only sweetens the pot.