News Column

Daily Wrap: Isle jumps but Brown slumps on earnings news

August 27, 2014

By David Nicklaus, St. Louis Post-Dispatch

Aug. 27--TODAY'S INDEXES -- Dow industrials 17122.01 + 15.31

S&P 500 2000.12 + .10

Nasdaq 4569.62 -- 1.02

IN THE CHIPS: Isle of Capri Casinos has been disappointing investors of late, falling 20 percent since it peaked in early July amid a takeover rumor. The company also has fallen short of earnings expectations in six of the past eight quarters, so perhaps investors were setting the bar low today. The company met analysts' earnings forecasts, and the shares surged 7.3 percent.

BROWN BEATS ESTIMATES: The bar apparently wasn't as low for Brown Shoe. The Clayton-based shoe company easily beat analysts' earnings estimates and raised its guidance slightly for the rest of the year, but investors bid the shares down 4.7 percent.

HOLDING AT 2000: The S&P 500 closed above the 2,000 mark for the second straight day, posting a fractional gain to set a new record. Bond markets were active with speculation that the European Central Bank will provide more stimulus to the continent's lagging economy. Ten-year bond rates hit new lows in Germany, France, Spain and Italy, and the U.S. 10-year Treasury rate fell to 2.36 percent from 2.40 percent.

IS THE GUN BOOM OVER? Smith & Wesson shares fell 13.6 percent after cutting its sales and profit forecasts. Sales of assault-style weapons have dropped sharply as gun enthusiasts seem to be less worried about the prospect of restrictive legislation.

RELIEF IN ISRAEL: The Israeli stock market had its best day of 2014 after a cease-fire in the Gaza Strip conflict. The T-A 25 index gained 1.4 percent and is up 6 percent so far this year.

LOCAL INDEX: The Bloomberg St. Louis Index fell 0.2 percent.


Isle of Capri 7.3% Brown Shoe -4.7%

Mallinckrodt 3.1% American Railcar -2.1%

Allied Healthcare 2.4% Olin -1.7%

ANALYST'S INSIGHTS: Robert Haworth, senior investment strategist at US Bank, thinks the Federal Reserve may start raising interest rates in the first half of 2015, perhaps as early as March. "Market expectations for the pace of rate hikes remain well below the Fed's own forecasts," he writes. "In our view, Treasury yields are likely to rise as investor estimates for the path of policy steadily shift towards the policymakers' projections."

THE DAY AHEAD: The Commerce Department will revise its estimate of second-quarter gross domestic product. Its initial estimate had GDP up 4.0 percent between April and June after falling 2.9 percent in the first quarter.

David Nicklaus is business columnist at the St. Louis Post-Dispatch. Subscribe to his Facebook page or follow him on Twitter @dnickbiz.


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Source: St. Louis Post-Dispatch (MO)

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