Investment guru Warren Buffett might have surveyed the economic landscape and decided to double down, but the average investor had a ho-hum day Tuesday.
This story first appeared in the November 4, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index slipped 0.1 percent, or 0.38 points, to 383.29, as the Dow Jones Industrial Average dipped 0.2 percent, or 17.53 points, to 9,771.91. Shares of Polo Ralph Lauren Corp. rose 2.3 percent to $78.47 after the firm bested second-quarter expectations. Leading all stocks covered by WWD, Revlon Inc. continued its recent surge, gaining 7.2 percent to $10.79, 87 percent higher than on Oct. 23. Among specialty stores, Caché Inc. was ahead 5.2 percent to $5.04 and Charming Shoppes Inc. was up 5 percent to $4.81.
But it was a busy day for Berkshire Hathaway Inc. and Buffett, the company’s chairman and chief executive officer. In Buffett’s largest acquisition to date, Berkshire agreed to buy Burlington Northern Santa Fe Corp., one of the country’s biggest railway companies, in a deal valuing the firm at $44 billion, including debt.
Buffett is known for his shrewd investments based on simple principles and described the deal as “an all-in wager on the economic future of the United States.”
“America must grow and prosper for railroads to do well,” he said.
But there was also a prominent reminder Tuesday of the toll on workers as corporations downsize. Johnson & Johnson said it would lay off as many as 8,200 employees as it restructures its global operations. Shares of the firm fell 0.9 percent to $58.93.
The drumbeat of layoffs and business failures since December 2007 has stripped more than 7.2 million jobs from the U.S. economy, which even in the best of times needs to add about 150,000 jobs each month to keep up with population growth.
Consumers have been laid low not only by job insecurity, but also by shrinking home values and reduced access to credit. Many stores will update Wall Street on the consumer’s mood on Thursday when they report their October sales.