This Is the Reason the S&P 500 Rally Kicked Into High Gear

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The markets didn't quite know what to think of this morning's ADP National Employment Report that highlighted a better-than-expected addition of 162,000 private sector jobs in September; however, a mid-afternoon report out of Europe changed that in a hurry. According to European Union regulators, EU banks have raised an additional $265 billion in capital since December by issuing capital, withholding dividends, and reducing riskier holdings. With the ADP report signaling a possible stabilization in U.S. job growth and EU banks doing what's necessary to meet new capital regulations, the S&P 500 (INDEX: ^GSPC  ) had a weight of worry lifted off its shoulders, rising by 5.24 points (0.36%) to 1450.99.

Let's have a quick look at some of the stocks most directly responsible for influencing the S&P 500's movements today.

Homebuilders are off to the races across the board today. Both Lennar (NYSE: LEN  ) and D.R. Horton (NYSE: DHI  ) are leading the charge higher to the tune of a 7% gain for Lennar and 6% for D.R. Horton. The impetus for the surge higher was a report from the Mortgage Brokers Association that noted a 16.6% seasonally adjusted increase in mortgage applications for the week ended Sept. 28. The MBA also highlighted that its refinancing index hit its highest levels since April 2009. That's great news for homebuilders, because it signals more people are buying homes and banks are apparently more willing to lend.

Online streaming company Netflix (Nasdaq: NFLX  ) is also enjoying a rare day in the spotlight following a "buy" reiteration from Citigroup analyst Mark Mahaney. Netflix shares soared 11% after Mahaney proclaimed the company to be at a "highly reasonable valuation." However, I wouldn't allow your excitement or emotions to get the better of you. I established a long list of concerns earlier in the year that stand ready to derail any rally in Netflix, and I'd suggest taking Mahaney's comments with a grain of salt.

Hewlett-Packard (NYSE: HPQ  ) , on the other hand, was responsible for putting up the biggest rotten egg of the day, with its shares giving up a whopping 13%. CEO Meg Whitman, in a meeting with analysts, guided HP's 2013 adjusted profit projections (excluding restructuring costs) to a range of $3.40 to $3.60, well below the $4.18 Wall Street had been forecasting. Whitman's multiyear turnaround plan entails laying off 27,000 employees by 2014 to save between $3 billion and $3.5 billion annually. Not exactly known as an innovator, Whitman, eBay's former CEO, still has a lot to prove to investors before she gets their nod of approval. However, I can't help pointing out that HP is valued at just 4.3 times 2013 earnings according to the midpoint of Whitman's estimate. There just might be a value play here after all.

A streaming success or a cascading waterfall?
Netflix has been caught in a constant tug-of-war by Wall Street analysts for the better part of a year now. In our latest premium research report on Netflix, we offer more in-depth and unbiased analysis on the opportunities and pitfalls facing Netflix than you will find by mashing a dozen different analysts' comments together. Furthermore, this report comes with a year of regular updates and gives you the tools necessary to make smart long-term investing decisions. Click here to claim your investing edge!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Netflix and Citigroup. Motley Fool newsletter services have recommended buying shares of ADP, Netflix, and eBay, and creating a bear put ladder position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2042874, ~/Articles/ArticleHandler.aspx, 10/22/2016 4:56:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:47 PM
^GSPC $2141.16 Down -0.18 -0.01%
S&P 500 INDEX CAPS Rating: No stars
DHI $29.08 Down -0.29 -0.99%
D.R. Horton CAPS Rating: ***
HPQ $13.80 Down -0.30 -2.13%
HP CAPS Rating: ***
LEN $41.22 Down -0.18 -0.43%
Lennar CAPS Rating: **
NFLX $127.50 Up +4.15 +3.36%
Netflix CAPS Rating: ***