Retail Earnings Alert: Checking Out Best Buy, Staples and Walmart

On Thursday morning, investors were provided with further indications that the Federal Reserve will increase interest rates soon, including an encouraging unemployment claims figure and a few key earnings reports, and the major indices responded favorably.

The Dow Jones Industrial Average rose 35.68 points or 0.19% to 18,903.82, the Nasdaq Composite added 39.39 points or 0.74%, and the S&P 500 gained 10.18 points or 0.47%.

With the market continuing to flirt with all-time highs, one has to wonder when a downturn will occur. Don't get caught holding the wrong stocks when that happens.

Fed Chief Janet Yellen testified in front of Congress on Thursday and told members of the committee that a rate increase could be "appropriate relatively soon."

Investors took this as a nearly sure sign that the Fed would move rates higher by 0.25% during its December meeting, as rates on Treasury notes rose across the board.

The Department of Labor also reported that initial jobless claims for the week ended Nov. 12 fell to their lowest level since November 1973. Although economists were expecting claims to hit 257,000 for the week, they actually came in at 235,000.

Most investors see this as a good sign for the economy, but with the holidays approaching we need to remember that companies are hiring to fill seasonal spots, and one strong week doesn't prove a trend.

Other important news Thursday was earnings reports from several big retailers. Let's take a look at three of the biggest.

1. Best Buy (BBY)
Technology retailer Best Buy reported encouraging third-quarter earnings Thursday, and its shares rose 13.7%.

Best Buy reported revenue growth of 1.4% from a year earlier, while adjusted net income rose 37.5%.

Revenue of $8.95 billion beat analysts' estimate of $8.85 billion, while adjusted earnings came in at 62 cents a share, again above the forecast of 47 cents a share.

Looking ahead to the fourth quarter, management forecasts revenue of between $13.4 billion and $13.6 billion and earnings between $1.62 a share and $1.67 a share. Analysts had been expecting revenue of $13.7 billion and earnings of $1.58 a share in the fourth quarter.

Best Buy looks as if it has slowed if not stopped the affect that Amazon and other Internet retailers were having on its business. However, it is important to keep in mind that Best Buy still operates in a very difficult niche space where price of products wins.

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